On Feb. 1, Facebook will release its latest quarterly report and observers hope that the figures will be positive enough to trigger the social media's stock to rise even further. The previous quarter's performance has been marred by a slight dip in stock price in November due to investors' concern for the announced Facebook spending for 2017.
Facebook Earnings Projection
The bulk of analysts predict that Facebook will report an uptick in revenue. The popular estimate is $1.31/share, riding on $8.40 billion earnings.
If that projection will prove correct, then it will constitute at least 44 percent growth in sales year-over-year. According to Zacks, it could also reflect a staggering 91.37 percent increase in earnings per share.
Facebook recently attempted to dampen expectations about its performance. For instance, during the Q3 earnings call with investors, David Wehner, the company's CFO, stated the possibility that the Q4 earnings could sustain a slowdown in terms of growth. This can be expected because the same period a year ago already saw a 44 percent growth rate, making it hard to top. The 56 percent growth rate posted in Q3 is also harder to outpace.
One should also note that Facebook has previously stressed that it is facing a decline in payments and fees revenue. Reports also revealed that the company is facing a slowdown in ad placements on its new and enhanced products. These sources cite the consensus that Facebook is not yet tapping the multiple platforms for growth.
Overall Growth
All these variables, however, could be considered minor hiccups that are expected to fail in derailing the trajectory of Facebook's growth. The past few years have seen an average of 50 percent uninterrupted growth in Facebook's overall ad earnings. This is demonstrated in the manner by which some analysts have to do estimate revisions in the past two months alone, positively modifying projections each time.
The still untapped products such as Instagram and WhatsApp are also sources of enthusiasm for investors especially since Facebook is already moving to monetize them.
"Due to Facebook's early strength in video, massive audience, Instagram and other ancillary opportunities yet to be monetized, we see the stock reaching our $150 price target and remain buyers," Andy Hargreaves, an analyst at Pacific Crest Securities, said. "We expect solid Q4 results and believe the likelihood for cautious commentary on ad load and conservative expense guidance are captured in current expectations."
The market also seems to agree. Last Jan. 26, Facebook's stock price rose 1 percent, closing at 132.78, missing its all-time high valuation by a hair. This was posted last Oct. 25 when the company's stock was traded for 133.50.
