Facebook earnings preview: strong performance expected despite myriad of challenges

The US social media giant will report its Q4 earnings after the bell on Wednesday and despite the challenges the company has faced many on Wall St are expecting great things from its latest trading update.

Late on Wednesday, Facebook will report its Q4 earnings in what has been a challenging year for the social media behemoth, which has had to face down controversy over its data and privacy policies.

But despite two years of negative press attention, Facebook is expected to record a strong set of financial results on Wednesday, with forecasters expecting the company to report earnings of $2.18 a share and revenues of around $16.4 billion, according to a poll of analysts by FactSet.

User stability and ad growth crucial for Facebook

If Facebook can deliver on expectations, it would signal that the company has come out the other end of what has been a tough 12 months.

‘We believe usage trends across Facebook's platforms have remained relatively stable and expect strong growth at both core Facebook and Instagram to drive nearly 28 percent year-over-year constant currency ad growth in 4Q,’ KeyBanc Capital Markets analysts Andy Hargreaves and Tyler Parker wrote in a note.

Facebook’s strong track-record of beating earnings estimates

Analysts are expecting good things from Facebook’s latest trading update and if the company’s past performance is anything to go by the social media giant is likely to please investors on Wednesday.

According to research carried out by Bespoke Finance Group, the company has an earnings beat rate of 96% and averages a 2.8% increase in share price the day after announcing its result, with that figure rising to 5.4% when it releases its fourth quarter update.

In terms of sales, Facebook has beaten forecasts 88% of the time, with that figure impacted by the fact the company has missed its estimate in the last two quarters.

‘Weakening revenue growth is one of the reasons the stock struggled so much in the second half of 2018,’ Bespoke said.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

See an opportunity to trade?

Go long or short on more than 17,000 markets with IG.

Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

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

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

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.