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Facebook Earnings: Wall Street Is Optimistic

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Wall Street has become optimistic about Facebook Inc (NASDAQ:FB)’s future ahead of Q2 earnings report later today, raising the consensus earnings per share to 14 cents on $1.62 billion of revenue, compared to 12 cents on $1.18 billion of revenue this time last year, reports All Things D.

Facebook Earnings: Wall Street Is Optimistic

Ad money moving to online, mobile, and social media

The main reason behind this optimism is that Wall Street sees ad money moving to online and mobile platforms and believes that Facebook Inc (NASDAQ:FB) is going to receive a boost from this change. That might seem obvious, but Facebook has faced a great deal of skepticism about its ability to turn its enormous user base into mobile ad revenue. As people spend more time on mobile devices in favor of traditional computers, some analysts worried that Facebook was being left behind.

But mobile ad revenue jumped from 23 percent of Facebook Inc (NASDAQ:FB)’s total revenue in Q4 2012 to 30 percent last quarter, and analysts think that it will jump again when Q2 numbers are released, possibly as high as $5 million per day just in mobile ads.

“We remain bullish as we believe ad dollars are increasingly shifting to online, mobile, and social and we expect Facebook to capture a growing portion of ad budgets going forward,” said JP Morgan analyst Doug Anmuth.

Facebook needs to release better metrics

One thing that analysts are hoping to get from Facebook are better metrics about the company’s user base. In the past Facebook has reported average daily and monthly users, but has not given more in-depth information about the amount of quality of engagement, even though it is well known that Facebook Inc (NASDAQ:FB) tracks such information carefully.

Better metrics to explain how people interact with Facebook could allay fears that, while ubiquitous, Facebook may not play as central a role in people’s social lives as it used to, especially among younger customers. If Facebook Inc (NASDAQ:FB) continues to hold back on this type of information, investors and advertisers will have to wonder whether Facebook is turning into just another app that many people have downloaded.

Video game revenue falls flat

Analysts expect Facebook Inc (NASDAQ:FB) revenues from games to show no sequential growth as games move away from the desktop to smart phone and tablet games. Since these games don’t go through Facebook, or at least don’t need to, micropayments from in-game purchases and in-game ads don’t benefit Facebook. This change in gaming habits has also been a blow to Zynga, a gaming company closely associated with Facebook Inc (NASDAQ:FB) in the minds of many casual gamers.

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