Facebook Inc (FB) Q3 Earnings Preview: Expectation Anxiety

Facebook Inc (NASDAQ:FB) has come into its own in 2013. The social network has won the approval of the market after many months out in the cold. It’s shown that it is able to retain its users, and it has shown that it can make real money off of the services it provides. The company’s earnings report for the third quarter is due to arrive this afternoon.

Facebook Inc (FB) Q3 Earnings Preview: Expectation Anxiety

In a report on the coming Facebook Inc (NASDAQ:FB) numbers, Raymond James analyst Aaron Kessler put a price target of $56 on shares in the social network. The analyst said that solid results should be expected from Facebook in this afternoon’s earnings report, though the bar is set higher this time around.

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Facebook mobile monetization

Mobile revenue and earnings have become some of the most important numbers for Facebook Inc (NASDAQ:FB). The company’s better-than-expected showing in the area in the second quarter led to the rally of its stock in the second half of the year. Facebook is pushing new ad formats in order to monetize mobile platforms and it appears to be working well thus far.

Facebook Inc (NASDAQ:FB) will need to answer several questions on the mobile front, according to Kessler. The big indicators are going to be user engagement on mobile, usage of new ad formats, mobile app installs, and video ad rollout. The monetization of Instagram will be another important indicator.

Facebook earnings

Analysts following Facebook Inc (NASDAQ:FB) are looking for earnings per share of 18 cents from this afternoon’s earnings report. Revenue for the third quarter of 2013 is expected to come in at around $1.9 billion. In the same three months of 2012 Facebook Inc (NASDAQ:FB) earned 12 cents per share on revenue of $1.2 billion.

It is clear that Facebook Inc (NASDAQ:FB)’s earnings are growing, but it is not clear that they will continue to grow fast enough for investors. Facebook Inc (NASDAQ:FB) is a fast-growing company, and the firm’s future is anything but secure. So far in 2013 the company’s shares have increased in value by more than 85%, though they have retreated from highs hit earlier this month.

Facebook Inc (NASDAQ:FB) shares are currently trading at more than 185 times 2012 earnings. That implies a huge amount of growth in the coming years, and could mean a certain amount of volatility in the firm’s stock after earnings. Facebook shares shot up after the great earnings report it revealed in July. If the company misses this afternoon, shares might respond correspondingly poorly.