Don’t necessarily assume it
will post less-than-stellar revenue on Wednesday just for everything that’s revolving around it right now, from Washington’s antitrust and misinformation allegations to the implications of
new ad tracking limits.
Wall Street certainly doesn’t think that’s the case, at least during the second quarter.
Facebook (marker: FB) is expected to report a profit of $ 8.8 billion, or $ 3.52 per share, about 70% growth. And the consensus revenue estimate is up nearly 50%, to $ 27.9 billion. Facebook’s monthly active user base is even expected to grow by 7.3%, to 2.9 billion.
Now, it’s not that threats don’t matter (they will at some point), but they just don’t matter right now. Even very real, here and now: Apple’s app tracking transparency initiative, which went into effect in April and would force users to opt for Facebook tracking outside of that app, seems to it has not caused nearly as much damage to revenue as it could have.
Strong street estimates, powerful results from rivals Snap (SNAP) and social media
(TWTR) last week and last year’s weak quarter for digital advertisers due to Covid-19 spending declines; all are fueling investor expectations. According to analysts, they are looking for a substantial pace and uptrend for the third quarter.
For Ivercore ISI analyst Mark Mahaney, Apple’s tracking change is not history. You’ll be looking closely at the monthly Facebook user count and how it’s maintained until last year, half-closed when people didn’t have much else to do. Mahaney expects user growth to slow.
BofA Securities analyst Justin Post agrees with Apple. Early data that his team has reviewed suggests the new policy will not have a big impact in the second quarter. Post believes investors should monitor comments on the impact of follow-up changes during the second half of the year; his team predicts the new policy could cut third-quarter revenue by an average digit.
Aside from advertising, it never hurts to pay a little attention to Facebook’s virtual reality efforts. CEO Mark Zuckerberg has stressed the importance that the company’s virtual reality and augmented reality business could have and has bet on billions in that statement. Second-quarter revenue, which includes the Quest 2 VR gadget, is expected to be $ 690.5 million.
Of the 58 analysts covering Facebook, 48 give the shares a Buy rating. Seven value stock retention and three have a sell rating. The average target price is $ 392.91, which is up 7.3%. Shares ended Tuesday’s regular session at $ 367.81.
Shares have advanced 34% this year; the S&P 500 index is up 18%.
Write to Max A. Cherney at [email protected]