Facebook share price: what to expect from Q2 earnings

Facebook continues to battle controversy, but the long-term outlook still looks bright for the social media giant.

When does Facebook report its Q2 earnings?

Facebook will report its quarter two (Q2) earnings aftermarket on 24 July 2019.

The stories the markets are following:

  1. Financials
  2. Usership
  3. Regulatory tightening
  4. Libra-coin

Financials

Equity analysts are expecting another mixed quarter of results from Facebook, but the long-term picture is expected to remain solid. Annualised revenue, net-income and earnings growth are forecast to be solid, but the company is expected to show the effects of fines and ongoing legal costs. The earnings outlook remains positive for Facebook, however, courtesy of strong growth in the company’s WhatsApp and Instagram applications, and expected user growth and therefore advertising revenue through those platforms.

Usership

Facebook users are expanding, and are expected to continue to expand, into the future. But the rate of user growth and user frequency is slowing. Having battled through a terror year for public relations, following several high-profile instances of data and privacy breaches, investors will be monitoring to what extent these controversies have eroded consumer engagement and trust. This relates especially to the impact this dynamic has had on Facebook’s digital advertisement revenue – which remains the company’s major revenue source.

Regulatory tightening

Facebook has attracted the ire of regulators, politicians, the public and markets for its questionable approach to users’ privacy. Only a month ago did the US Fair Trade Commission slap a $5 billion fine on the social media giant for repeated breaches of privacy laws. Of even greater concern to market participants is growing calls from policymakers, and even US President Donald Trump, to introduce anti-trust legislation against US tech giants, to curb their growing monopolistic behaviour.

Libra coin

Another source of controversy, and excitement, around Facebook this reporting season is the company’s recently announced plans to launch its own cryptocurrency, libra coin. Though unlikely to change the fundamental perceptions of Facebook’s current value, investors will be watching for commentary from the firm about its ambitious desire to launch its own currency. Further to this will be the market’s response to the viability of the project before its proposed launch in 2020 – from both the operational and regulatory perspectives.

In the numbers - the financial metrics to watch:

Metric Value (Est. Quarter on Quarter) Growth (Est. Year on Year)
Earnings per share (EPS) $1.87 7.70%
Revenue $16.5 billion 24.67%
Operating profit $6.24 billion 6.37%
Net Income (adj.) $6.28 billion 2.34%
Daily active users 1.57 billion 6.80%
Monthly active users 2.41 billion 8.07%

Stock analyst recommendations and consensus price target:

Buy Hold Sell Price target
46 6 2 $217.86

Source: IG charts

Indicator Support resistance 50-day EMA 200-day EMA Daily RSI
Level $187 $220 $187 69

What might the markets’ outlook be from Facebook’s earnings?

Overall, the outlook for Facebook remains solid. Uncertainty around the company will likely remain high into the future, as regulatory risks mount, and the company launches into ambitious new projects and business models. But Facebook’s core business looks capable of growth, with analysts expecting earnings to continue to expand at an industry-competitive tick.

The current share price remains below equity analysts’s consensus target, suggesting long-term upside for the company’s shares. Momentum indicators also suggest the trend is higher, although a short-term pullback in the price may be afoot as technicals climb towards overbought levels.


The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.