Facebook Earnings Preview: The Bar Has Been Set Very High

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November 2, 2016 1:22pm Nasdaq:FB

facebook-fb-logoSocial media titan Facebook Inc (NASDAQ:FB) will deliver its latest earnings report today after the closing bell. Here’s what investors can expect.

Analysts are looking for EPS of $0.97 and revenue of $6.92 billion for the third quarter, both of which would be records for the company. In fact, that revenue estimate implies sales growth of nearly 58% from last year — no small feat for any company, let alone one of Facebook’s size (~$360 billion market cap).

Last quarter, FB blew away expectations and beat on every conceivable metric. Mobile ad growth continues to be the main revenue driver, as the company executes there at a level that no other company can come close to matching. Getting back to revenue growth, FB has delivered top line year over year growth of 38.9%, 40.4%, 51.7%, 51.8%, and 59.2% in the trailing five quarters.

Clearly, the bar has been set very high, and the company has little room for error if it wants to maintain the sort of growth that investors have become accustomed to.

From a technical standpoint, Facebook shares are pulling back to key levels. Its 50-day simple moving average (SMA) of $128.62 has already been crossed, and the stock is within a few dollars of its 100-day SMA of $124.02.

In today’s report, investors will key in on daily active users (DAUs), which are expected to come in around 1.16 billion, a 15% gain from last year. In Q2, DAUs were 1.13 billion, which was up 17% from the prior year.

Mobile DAUs are also a key metric to watch. Those were 1.03 billion in Q2, up 22% year-over-year. Investors will want to see 1.09 billion or more for Q3. Monthly active users (MAUs) are expected to be around 1.76 billion, while mobile MAUs of 1.67 billion would meet expectations.

Mobile ad revenues for Q3 are expected to come in at 85% of total revenue, down from 84% last quarter.

Stay tuned after the closing bell today, when we’ll have full coverage and analysis of FB’s latest earnings numbers.

Facebook shares fell $2.83 (-2.19%) to $126.67 in Wednesday afternoon trading. Year-to-date, FB has gained 21.73%.


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