A lot of tech companies have posted disappointing results but the analyst are hopeful with Facebook to post impressive earnings
If there is any company which can perform slightly better amidst the below the expected performance of the tech companies, it is Facebook Inc. The social networking giant has managed to garner remarkable growth, especially on mobile devices. It also has various revenue streams –on both long and short term horizon –particularly in virtual reality and messaging. The social networking behemoth will be celebrating its fourth anniversary of being a public-traded company and analysts are expecting it to post impressive first quarterly results due today –Wednesday.
According to the poll carried out by FactSet, the analysts have been expecting the $308 billion organization to post an EPS of $0.62 which is an increase of 48% in comparison with a year earlier period. Revenue is expected to sprang 48% and reached to $5.3 billion. Since its initial public offering, in 2012, the company has beaten the analysts’ expectations only once.
The social networking giant’s smooth transition to mobile has been beneficial. In the fourth quarter, close to 80% of the revenue was generated from the advertising on mobile. Just three years ago, the advertising revenue from mobile had been contributing merely one-quarter of the company’s total revenue. According to Nanigans, Facebook’s marketing partner, over the last quarter, the company’s spending on mobile, in comparison with the desktop, jump up 15% while the return on ad spend increased by 57% year-over-year. At the end of the last year, the average revenue per user for Facebook went up 33%. Through this, in the fourth quarter, Facebook was able to earn net income of slightly more than $1 billion.
This move sets a high bar for the tech stocks which have been already struggling in the tough market. The tech giant’s few peers including Netflix Inc., Microsoft Corp., and Google’s parent Alphabet Inc., along with companies like International Business Machines Corporation, and Intel Corporation have posted disappointing results during the on-going earnings season. The most valuable company of the world, Apple Inc. and the social networking site also posted lower-than-expected earnings late Tuesday. It is not unusual for the once “overachievers” to post disappointing results but Facebook is posing to have promising quarter.
The Menlo Park, CA firm’s forward multiple was close to “twice as high” following its trading debut in 2012. Apart from slight stock slumps which the company encountered during initial stages of turning into trading company, the stock has always jumped up and currently it has increased at about 30% compound annual clip.
The company has been actively involved in increasing its power over its apps fraternity. Facebook didn’t offer segregated accounts to disclose the distinct revenue details of each app run by it however the analysts from Credit Suisse are expecting the company’s Instagram app to contribute around 11% to company’s total revenue and earn approximately $3.2 billion in the current year.
The company’s most popular messaging apps WhatsApp and Messenger have not directly been moneymaking segment for the company but they have attracted a large number of users. WhatsApp –which now has a billion users –and Messenger –with 900 million users –offer end to end encryption to its users. Messenger is now also offering bot store which will help the users to bring down the over flow of the apps.
The company has also entered into the virtual reality and it has lately started selling Oculus Rift –VR gear for $599. According to the Wired, 400 out of 1200 employees at Facebook are working on virtual reality. Even though an immediate flow of cash is not expected out of the company’s VR segment but the mere entry of the company in the region proposed future possible income for the social networking titan.
At the market which closed on Tuesday, Facebook Inc. stock stood at a price of $108.76.