With this week’s kick off for third quarter earnings, investors will have to wait a few more weeks for social media giant Facebook Inc (NASDAQ:FB)’s numbers. On Tuesday, the company announced it will report earnings after the bell on Oct. 23.
In addition, Facebook Inc (NASDAQ:FB) will have a conference call to review the results at 2 p.m. PT / 5 p.m. ET on the same day. A live webcast can be accessed through the company’s Investor Relations website; its earnings press release, financial tables, and slide presentation can be found there as well.
In his first-quarter letter to investors of Greenlight Capital, David Einhorn lashed out at regulators. He claimed that the market is "fractured and possibly in the process of breaking completely." Q1 2021 hedge fund letters, conferences and more Einhorn claimed that many market participants and policymakers have effectively succeeded in "defunding the regulators." He pointed Read More
BTG Media Downgrade
As to what investors can expect from the earnings report, one clue may be found in Monday’s downgrade of Facebook’s stock by BTG Media from a “Neutral” rating to “Sell” with a $16 price target. According to the firm’s analysts, the company’s reliance on ad revenue and a changing advertising landscape that emphasizes mobile ads are a major reason for the downgrade.
Facebook generates over 80% of its revenue from advertisements. BTIG sees most advertisers switching to app-based mobile platforms, thanks to their rising popularity among users, as compared to the conventional desktop, web-based platforms.
This is area that has been challenging for Facebook Inc (NASDAQ:FB) to embrace, and it could lead to its downfall.
In addition, the company’s mobile platform advancements are not gaining traction, and this is also another area of concern.
Second Quarter Earnings
For Facebook Inc (NASDAQ:FB), the Oct.23 earnings report represents its second one as a publicly-traded company. On July 24, it released the long-awaited numbers and they were disappointing.
Facebook Inc (NASDAQ:FB) reported a $157 million loss, including a $0.08 per share loss, as compared to a net income of $240 million ($0.11 per share) from the previous year. Adjusted earnings for the second quarter were $295 million ($0.12 per share).
Revenue did rise 32% to $1.18 billion, up from the previous year’s $895 million. This exceeded analysts expectations of $0.12 cents per share adjusted earnings.
At the time, the company did not provide a forecast in its earnings release. Some wondered whether a negative one would have scared investors, who pushed the share price down 8% two days after the earnings announcement.
Stock Price Continues Fall
Fast forward almost three months and Facebook Inc (NASDAQ:FB)’s stock is still getting hit. Year-to-date it is down 48.4%.
In addition to Monday’s BTIG downgrade, other recent news affecting the stock price includes a September slowdown in desktop usage, as reported by ComScore and a Bloomberg story, that regulators pushed Facebook to disclose risks from its mobile and desktop advertising business days prior to its IPO.
Is all of this a way to manage expectations for another disappointing quarter for the social media company?
On Wednesday, Facebook Inc (NASDAQ:FB) is down 3.10%, trading at $19.60.