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Facebook earnings: The numbers that should be watched for an advertiser



In light of the continuing impact of the Cambridge Analytica scandal affecting abusive Facebook Inc. member data, Chief Executive Mark Zuckerberg has said on several occasions that the company has not seen any business impact. When Facebook announces first-quarter earnings, Zuckerberg has to prove it for the first time.

Cambridge Analytica data breach broke out in mid-March, meaning the impact would be limited to about 20% of reporting time – a significant amount of time, but, as Zuckerberg said, probably not enough, to dramatically influence financial results. To see the impact on Facebook's ad sales this quarter and beyond, investors will be looking for changes in ad sales and inventory.

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Even if Facebook

FB, -1

.08%

does not report the average cost per thousand impressions – a standard industry price indicator – the company typically gives investors percentage figures on how ad rates and inventory have changed a quarter of the profit sharing.

Because marketers and advertisers find Facebook inventory valuable if the company restricts inventory, such as changing the news feed and reducing the time it takes to serve its website, ad prices increase revenue growth.

If performance in the past is an indicator, as Facebook expands inventory, ad prices will decrease. If demand drops as a result of a counterattack by advertisers that are sensitive to the privacy concerns raised by the Cambridge Analytica controversy, ad prices may go down or not grow so fast, without increasing the amount of ad slot sold. [196592002] See Also: Why the Biggest Technology Firms Are Too Big To Be Successful

In the fourth quarter of last year, impressions rose 4% and ad prices increased 43%, compared to nearly the inverse ratio of the previous year : Ad impressions increased 49% and prices rose 3%. FactSet does not have analyst forecasts for these data points, but investors should be wary of any dramatic change in either this quarter or in future quarters.

The following is expected

Yield: On average, analysts surveyed by FactSet model first quarter earnings of $ 1.35 per share. Contributors to Estimize, which forecasts analysts, fund managers and academics' crowd-pull estimates, project earnings of $ 1.45 per share.

Revenues: Analysts predict $ 11.41 billion in Facebook revenue in first quarter with $ 10.11 billion in desktop revenue $ 1.21 billion, according to FactSet [19659002] Analysts predict US $ 5.35 in average revenue per user, though users in Canada and the US are generally worth more than anywhere else in the world. For the fourth quarter, US and Canadian average revenue per user was $ 26.76, compared to $ 8.86 in Europe and $ 2.54 in the Asia-Pacific region. The rest of the world, according to Facebook $ 1.86 per user.

Stock level: Over the past three months, the Facebook stock, like the S & P 500 Index, has fallen 8.3%

SPX, -0.85%

has dropped 5%

Of the 45 sell-side analysts covering Facebook, 41 have the equivalent of a buy, two rate it as hold and Two have a sell the valuation for the stock. The average price target is $ 216, which represents a 30% gain over the closing price of $ 166.

What to Watch For

Beyond all setbacks for privacy reasons, the changes that Facebook made on its platform will have a broader effect. For example, third-party developers need to look at additional ratings when asking for personal information from Facebook, which could affect some apps, Robert W. Baird & Co. analyst Colin Sebastian Freitag wrote in a note to clients.

"With these new restrictions, we continue to believe that there could be an impact on certain news / media / entertainment apps that use these services to reach audiences or improve their services," wrote Sebastian Facebook rated a purchase with a price target of $ 210] Opinion: This one number proves that Facebook's data scandal is already history

Facebook's growing security team is also worth seeing, as Zuckerberg said the company is in this area Finally, the most operating costs of Facebook relate to the payroll, this is most evident in the operating margins, wrote the analyst Ross Sandler of Barclays.

"Most of [revenue] growth is likely to come from the eCPM in Q1. Impression growth continues to be in the mid single-digit range, similar to Western market growth and declining exposure," Sandler said.

Sandler, who buys the stock at a target price of $ 225, also wrote these advertisers interested in direct answers and make buying decisions based on returns and not headlines around the "Facebook is Bad for the Company" narrative.

Moness Crespi Hardt analyst Brian White wrote in a note to customers Friday that his team will closely monitor Facebook's daily active user base.

"In the fourth quarter of 17, Facebook experienced the first sequential decline in DAUs in the US and Canada, which caused concern among investors," he wrote, adding that he faces data problems in the first and second quarters of 2018 due to the Cambridge Analytica. Most of these effects, White wrote, will be concentrated in the US and Canada.

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White has a buy rating for the stock with a target price of $ 200.

The stock suffers including the biggest drop in years, Canaccord genius analyst Michael Graham wrote that at current prices, it looks like an even more attractive buy. Graham has a Buy rating with a target price of $ 240.


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