Is It Time To Short Facebook Inc (FB)?

Facebook (FB) Information Technology – Internet, Software & Services | Reports July 27, After Market Closes

Key Takeaways

  • The Estimize consensus is calling for earnings per share of 84 cents on $6.07 billion in revenue, 3 cents higher than Wall Street on the bottom line and nearly $60 million on the top
  • Mobile has been one Facebook’s fastest growing segments along with video, messenger, and Instagram
  • Some analysts believe Snapchat is a real threat to Facebook which has caused them to downgrade the stock
  • What are you expecting for FB? Get your estimate in here!

It’s not surprising why investors have been head over heels about Facebook the past year. In each of the last 4 quarters, Facebook has consistently increased both top and bottom line growth. Mobile has been the key driver to Facebook’s success lately but other parts of the business are starting to move the needle. Video, messenger, and several of its acquisitions will be key to sustaining its growth trajectory. Ahead of its second quarter earnings several analysts have downgraded the stock over speculation that Snapchat has cannibalized Facebook’s user base. This might have some merits but Facebook’s competitive advantage is so large that Snapchat likely won’t have a material impact.

The Estimize consensus is calling for earnings per share of 84 cents on $6.07 billion in revenue, 3 cents higher than Wall Street on the bottom line and nearly $60 million on the top. Compared to a year earlier this represents a 67% increase in earnings and 50% in sales. Per share and revenue estimates have been on the rise lately, opposing any thought that Facebook was on its way down.

Facebook, FB, Earnings

Facebook’s progress as a business comes down to social media. With over 1.6 billion monthly active users and millions of advertisers, Facebook is leaps and bounds ahead of the competition. Its messenger service recently reached its own milestone, crossing the 1 billion MAU threshold. Facebook recently integrated a number of services into messenger including a payments feature and advertising services, a move that would shift messenger into a revenue generating business.

Messenger isn’t the only Facebook run product on the verge of monetizing. Past acquisitions such as Instagram, WhatsApp and Oculus Rift all have a bright future. The recent launch of Oculus propels Facebook to the forefront of virtual reality. VR/AR is expected to be one of the fastest growing spaces and presumably Facebook’s new cash cow.

The biggest concern this upcoming quarter is the emergence of Snapchat. Snapchat has quickly won the hearts of millennials, surpassing Twitter in terms of monthly active users. Any indication of Snapchat in Facebook’s earnings call could have a devastating impact on the stock and investor’s perceptions.

Facebook, FB, Earnings

Do you think FB can beat estimates? There is still time to get your estimate in here!