Facebook Likely to Beat Earnings Estimates Despite 2018 Scandals

January 28, 2019
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In the tech world, Facebook (NASDAQ: FB) has been one of the most popular stocks on the public market. With a growing empire that includes companies like Instagram and WhatsApp, Facebook is now much more than the innovative social media network that started in the mid-2000s.

Over the years, Facebook has continually sought to increase its revenue potential, which is largely derived from paid advertising on its key platforms. Despite numerous data scandals throughout 2018, it now looks like Facebook could hit a record for the holiday quarter

Analysts Predict a Record Breaking $6 Billion Quarter

The fourth quarter period is typically a strong one for Facebook. Revenues are high as advertisers spend big to push out their products to engaged audiences. According to the consensus, this should result in almost $6.4 billion of revenue for Q4. If the analysts are right, then this would exceed the previous holiday quarter by $2 billion.

Analysts also predict EPS to climb to at least $2.21 per share.

Predictions should never be taken as certainty, but the analysts here are going by some strong signals. It beat EPS expectations throughout the previous six quarters. Revenue figures have either closely matched or slightly exceeded expectations during the same period.

Out of 49 analyst ratings recorded by FactSet Research Systems, 34 analysts have awarded a BUY rating. Only 2 analysts are below the HOLD line. Confidence is strong, and this could help to boost Facebook stock, depending on how this week’s earnings call goes.

Facebook Stock Performance Over the Last 12 Months

On the stock market, Facebook tanked heavily halfway through last year. Stock prices reached a 52-week peak of $218.62 in July, and trade for just under $149 today.

While prices are still a long way off their highest in 2018, there has been positive movement so far this year:

  • 1 Month Change 87%
  • 3 Month Change 50%
  • YTD Change 67%

For investors who have been waiting for the dip to end, the current movement looks promising. If Facebook meets analyst expectations when it releases its Q4 earnings on Wednesday, then there could be some strong improvement in the stock.

The opening sessions of this week could be the ideal window to purchase ahead of the earnings call.

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