Following on from Apple’s results yesterday, the next tech giant to release its earnings report for last year will be the social network Facebook. Here’s what to look out for.
Facebook’s chief exec and co-founder Mark Zuckerberg has consistently wowed investors. Can he keep it up?
1. Ad spending is high, meaning revenue is up
Facebook has around 31.2 per cent of total ad display spending in the US, with about 32.1 per cent in the UK.
As well, at the end of last year, Facebook introduced ‘mid-roll advertising’, by displaying ads in Facebook Live videos, before rolling this out to Instagram’s Live videos in Stories, pushing new ways for brands to display ads.
This translates to high revenue, expected to be $8.5bn, up 46 per cent from $5.84bn in the year-ago period, according to Yahoo Finance.
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2. But ad revenue won’t always look like this
During Facebook’s third quarter earnings call in 2016, the company’s chief financial officer Dave Wehner told investors that there will be a slowdown in revenue growth rates due to a limit on how many ads can be fitted into the news feed.
3. Users are up but user engagement isn’t as great
Facebook is supposed to reach 1.81bn monthly active users and Instagram has around 600m monthly users.
This doesn’t always relate to straight engagement data, particularly as its advertising metrics have been proved wrong in the past, such as miscalculating the average time users spent watching videos.
4. Will shares ever stop rising?
Shares are up 14 per cent this month and could be set to rise after today.
Analysts at JP Morgan have said investors should buy shares in the company because its earnings will top expectations.
One of the bank’s analysts Doug Anmuth told clients on Monday: “Facebook remains our top large-cap pick.”
High praise indeed.
What’s next in the long run?
Probably, a bigger push on video.
Facebook Live and Instagram Live videos are showing the platform’s dedication to live streaming.
But we might also expect some more information about virtual reality.
Facebook does own Oculus after all, which released its first headset in 2016 and is supposed to be launching a wireless version in 2017, so we may hear more about the company’s plans for the VR developer.