There are only a handful of companies whose earnings are watched as closely as that of Facebook, Inc (NASDAQ:FB). The company’s Q3 2019 financial results are going to be released on October 30 and speculation regarding that has already reached a fever pitch.
The social media giant managed to beat expectations for both revenues and earnings in the previous quarter; however, the margins had declined considerably. The stock declined by as much as 2% on that day. That being said, the Facebook stock has gained as much as 40.5% this year so far and hence, investors are unlikely to tolerate even a minor setback.
Key Things To Watch
In Q2 2019, the company’s revenues grew by 28% year on year and analysts expect that the revenues are going to rise by 26.5% in the third quarter. Analysts estimate that the revenues are going to tough $17.37 billion for the quarter and on the other hand, earnings per share are estimated to hit $1.91 which is a rise of 8.5%. However, amidst all that, the erosion of margins remains a concern for most investors and it is certainly going to be watched closely when the earnings are announced. The company’s hyper spending on data security and user privacy issues have been one of the biggest factors towards that.
In Q2 2019, the operating margin had come down to 39%, which was a significant drop from the 44% operating margin it had recorded in the year-ago period. The other metric that is going to be watched closely is growth in DAU (daily active users) and MAU (monthly active users). The company recorded an 8% growth year on year in both metrics but it is important to note that growth has flattened out somewhat in the developed world and much of the growth is now being generated by the emerging markets. That being said, it should be noted that as many as 2.7 billion people used at least one of the four products of the company.
