Facebook Inc (NASDAQ:FB) shares fell 3% in afternoon trading on Monday, two days ahead of the company’s next earnings report. Its shares have almost doubled since its last earnings report, so expectations are running high. Alexei Oreskovic of Reuters reports that the social network is probably going to have to beat expectations in order to remain on Wall Street’s good side.
It’s all about Facebook’s mobile performance
Analysts from several firms say the key metric in Facebook Inc (NASDAQ:FB)’s results is its mobile advertising numbers. Estimates for mobile revenue range from $760 million to $840 million. But investors may be hoping to hear even higher numbers than those. Macquarie Research analyst Ben Schachter told Reuters that the social network needs at least $850 million if not $900 million in mobile advertising revenue for its September quarter.
What will happen to Facebook shares?
Steve Place of investingwithoptions.com told Reuters that as of Friday, weekly options for Facebook Inc (NASDAQ:FB) ending Nov. 1 implied about a 13.7% move either way. On average, shares of the company have moved 8.36% over the last five earnings reports. Since expectations for the social network are so high this week, some argue that it will be especially vulnerable to a share price decline if investors catch a glimpse of anything questionable in the company’s report on Wednesday. However, others say there’s still room for Facebook shares to go higher.
On average, analysts are expecting Facebook Inc (NASDAQ:FB) to report adjusted earnings per share of 18 cents on $1.91 billion in revenue for the September quarter.
Other key metrics in Facebook’s report
In addition to mobile ad revenue, investors will also want to hear about additional plans for monetization, like the much-anticipated video ads and Instagram advertising. RBC Capital analyst Mark Mahaney estimates that Instagram alone could generate $1.7 billion in revenue in 2015, making it a significant opportunity for Facebook Inc (NASDAQ:FB).