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.

Facebook Source: Bloomberg

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

Facebook chart

Facebook chart

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.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research 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 and quarterly summary.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

See opportunity on a stock?

Don’t miss your chance. Try a risk-free trade in your demo account, and find out whether your hunch could have paid off.

  • Log in to your demo
  • Try a risk-free trade
  • 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 wide range of popular global stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform, when it matters

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Bid
Offer
-
-
China 300
-
-

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

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets 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 spread betting and CFDs.

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

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.