Facebook Investors on Edge Amid Steep Stock Slide
October 30 2018 - 6:29AM
Dow Jones News
By Deepa Seetharaman
Facebook Inc. is scheduled to announce third-quarter earnings
after the market closes on Tuesday. Here's what you need to
know:
EARNINGS FORECAST: Facebook is expected to report a quarterly
profit of $1.46 per share, down about 8.2% from the prior year's
earnings per share of $1.59, according to data compiled by FactSet.
Many analysts expect Facebook's costs to jump, as it spends big on
video content, artificial-intelligence technology and platform
security.
REVENUE FORECAST: Analysts predict Facebook will report revenue
of $13.77 billion, up about one-third from the prior year.
WHAT TO WATCH:
GROWTH PROJECTIONS: In late July, Facebook suffered the
biggest-ever one-day loss in market value for a U.S.-listed company
after warning about slowing growth for the rest of the year.
Facebook shares have yet to recover, with the stock price down
roughly 35% from July 25 as of Monday evening. The company's
falling share price could have an outsize effect on internal
morale, especially when coupled with near-relentless external
criticism of Facebook's products, current and former employees have
said. Investors will be watching closely to see if Facebook's
outlook shifts significantly.
AD DEMAND FOR STORIES: One key factor shaping Facebook's
financial future is advertising demand for its Stories product,
which allows users to post photo and video montages that disappear
after 24 hours across its app. Facebook executives expect more
people to use Stories than browse the Facebook news feed next year.
But according to Credit Suisse, ads in Facebook Stories may cost
about half of those in the main news feed. "A few (advertising
agencies) have started to question the sustainability of rising
prices on the core platform as Stories has yet to be adopted by a
wide swath of advertisers," MoffettNathanson's founding partner
Michael Nathanson wrote in a note last week.
THE COST OF SAFETY: Over the last year, Facebook executives have
said they are willing to sacrifice profits to minimize the
downsides of its services. So far, users haven't abandoned the
Facebook platform en masse -- and likely won't -- but the company
is still facing a growing list of serious problems that it is
promising to manage. That means rising costs. "We're not doubting
they can't be fixed, but the fact that problems keep emerging
reinforces our view that the company is not as in control of its
business as it needs to be," said Pivotal Research analyst Brian
Wieser. "As problems are fixed, costs will rise, possibly faster
than the company has anticipated."
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
October 30, 2018 06:14 ET (10:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From Mar 2024 to Apr 2024
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From Apr 2023 to Apr 2024