Facebook Inc is firmly in place as one of the top five tech firms in the world. Some find it surprising that Mark Zuckerberg’s control over the internet rivals fellow tech giants Google and Apple. Facebook is still small in many terms next to these rivals, however, and those with shares are hoping that it can close that gap sooner rather than later. We’ll get a feel for that progress on Wednesday afternoon.
Facebook will show off its earnings numbers for the three months through September right after the bell rings in New York. Shares in the firm crossed $100 in the run up to the release, and there’s a huge amount of growth built into the results after great numbers from some of its rivals.
Here’s what to look for from Facebook
Ivan Feinseth, CIO of Tigress Financial Partners was on CNBC on Wednesday morning and gave his opinion on what to look for from Facebook. In his view mobile user engagement is top of the pile. By consensus Wall Street is looking for the firm to show it has total 1.53B monthly active users, with 1.36B of those getting online from a mobile device.
In Mr. Feinseth’s view the key thing to look for at Facebook isn’t earnings, it’s the return on investment the firm manages to secure. In that line, he wants to see results from “some of the investments that they’ve made, and some of the acquisitions like Instagram, to continue to pay off.”
Brean Capital’s Sarah Hindlian says that Facebook will report ahead of consensus on the back of “strong video & carousel ads, ongoing budget shifts to digital/ social, as well as Instagram’s ramp.”
Costs are another thing that Hindlian would like to see Facebook offer answers on. In her view, “Facebook to provide some early color on its cost growth trajectory, though we believe that Facebook is wisely investing into its infrastructure and products.” Looking for clear data on costs is hopeful, but it doesn’t seem likely that Facebook will be up to the challenge.
Here’s what Facebook won’t reveal
Facebook has a lot of long term plans that it hopes will cement its place at the top of the tech food chain. right now, however, none of those projects make money, and it’s not likely we’ll hear much about the m after the market closes on November 4.
The key money makers for Facebook going forward are likely to be its mobile apps. It hasn’t started to really monetize Messenger or WhatsApp just yet. Instagram is sure to be a focus of this afternoon’s report, but the other Facebook platforms have just as many, or more, users.
Internet.org, Facebook’s project to get more people on its social network in countries with poor web access, is also likely to be kept in the background of the report. The program could be a a major factor in Facebook’s future growth, and it seems Menlo Park has already built ads to suit.
We won’t be hearing much about these Facebook products this time around, and some analysts, like Ross Sandler at Deutsce Bank reckons that’s hiding the real value of the firm from traders. He reckons there will be “meaningful upward estimate revision over the next 2-3 years as the family of apps outside of core FB start to monetize.”