Facebook (FB) to Report Q1 Earnings: What's in the Cards?

Facebook's (FB) Q1 results are likely to reflect continued subscriber growth. However, ad sales are expected to have been drained by the coronavirus pandemic. Read More...

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Facebook FB is set to report first-quarter 2020 results on Apr 29.

The company expects the first-quarter revenue growth rate to decline in low-to-mid-single-digit percentage on a sequential basis due to ad targeting-related headwinds and the increasing impact from global privacy regulations like GDPR and CCPA.

Moreover, changes made by Apple AAPL and Alphabet’s GOOGL Google in their mobile operating systems and browser platforms limited Facebook’s ability to track the user activity trend.

Notably, the Zacks Consensus Estimate for revenues is pegged at $17.29 billion, indicating an increase of 14.7% from the year-ago quarter’s reported figure.

Additionally, the consensus mark for first-quarter earnings is pegged at $1.72 per share, having been revised 10% downward in the past 30 days but indicating a whopping 102.4% growth from the figure reported in the year-ago quarter.

Notably, the company’s earnings missed the Zacks Consensus Estimate in two of the trailing four quarters while beating the same in the other two, the average negative surprise being 22.1%.
 ” data-reactid=”12″>Facebook FB is set to report first-quarter 2020 results on Apr 29.

Moreover, changes made by Apple AAPL and Alphabet’s GOOGL Google in their mobile operating systems and browser platforms limited Facebook’s ability to track the user activity trend.

Notably, the Zacks Consensus Estimate for revenues is pegged at $17.29 billion, indicating an increase of 14.7% from the year-ago quarter’s reported figure.

Notably, the company’s earnings missed the Zacks Consensus Estimate in two of the trailing four quarters while beating the same in the other two, the average negative surprise being 22.1%.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Facebook, Inc. Price and EPS Surprise” data-reactid=”13″>Facebook, Inc. Price and EPS Surprise

Facebook, Inc. price-eps-surprise | Facebook, Inc. Quote

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Let’s see how things are shaping up for the upcoming announcement.

Coronavirus to Hurt Ad Sales

Facebook witnessed a significant jump in the usage of its services including Messenger, Instagram and WhatsApp in the first quarter amid the growing incidence of coronavirus (COVID-19) pandemic.

Total messaging surged more than 50% in countries most affected by the coronavirus in the past month. The company also witnessed increased traffic in its feed and stories products. Further, voice and video calling more than doubled on Messenger and WhatsApp in places bearing the brunt of the coronavirus pandemic.

The Zacks Consensus Estimate for first-quarter MAUs and DAUs worldwide is pegged at 2.544 billion and 1.678 billion, respectively.

Nevertheless, Facebook expects its ad sales for the to-be-reported quarter to take a hit from lockdown and mass quarantine measures undertaken in a number of countries to break the chain.

Facebook’s ad-sales warning followed Twitter’s TWTR withdrawal of its first-quarter 2020 guidance due to the pervasive impact of the coronavirus (COVID-19) anxiety on advertiser demand.

However, Facebook’s solid user base in the Asia Pacific, growth in Instagram Stories and Feed, and concerted efforts to improve privacy, transparency and authenticity of its platform are expected to reflect on the top line.

The consensus mark for this Zacks Rank #3 (Hold) company’s first-quarter advertising revenues is pegged at $17.52 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Initiatives to Fight Coronavirus

Facebook announced a $100-million investment to support journalism, especially the hard-hit local news agencies by ad revenue loss due to the coronavirus pandemic. The company is investing $25 million in grants for local news organizations via the Facebook Journalism Project. Moreover, it is offering $75 million in marketing spend. Thus, money is moving to news organizations across the globe.

Further, during the quarter, Facebook took several initiatives to fight the coronavirus pandemic. It announced the launch of a $100-million program consisting of cash grants and ad credits in a bid to bail out small businesses.

Additionally, the company supported fact-checking operations with AFP and other media companies including Reuters and the Associated Press, under which false content is downgraded in news feeds so that fewer people see it.

Other Q1 Developments

Facebook also inked a deal with British device manufacturer Plessey Semiconductors Ltd. Per the pact, Plessey’s LED manufacturing operations will be dedicated to aid Facebook prototype and develop new technologies for potential use in the AR/VR space for the next several years.

Notably, Plessey specializes in manufacturing microLED displays for AR headsets and heads-up-displays.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don’t buy now, you may kick yourself in 2020.

Click here for the 6 trades >>” data-reactid=”27″>Let’s see how things are shaping up for the upcoming announcement.