Facebook Inc (FB) Q2 Earnings: What The Wall Street Expects

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Facebook shares have rallied more than 19% in the last 30 days, making it more valuable than JPMorgan Chase and General Electric. The stock may swing even higher if the social networking giant reports solid second-quarter results on Wednesday, July 29. On Tuesday, BTIG bumped up its price objective for Facebook to $117 while reiterating its Buy rating.

Facebook Inc (FB) Q2 Earnings: What The Wall Street Expects


Can Facebook (FB) draw in large advertisers?

Analysts polled by Thomson Reuters expect Facebook to report $0.47 per share in Q2 earnings, up 12% from the corresponding quarter a year ago. Its June quarter revenue is expected to jump 36.60% YoY to $3.98 billion. However, that would be the fifth straight quarter of revenue deceleration. Rosenblatt Securities analyst Martin Pyykkonen said in a research note Tuesday that the investor focus would be on whether Facebook can attract large advertisers.

He added that the Menlo Park-based company could further expand its dominance in mobile advertising technology, where there is still plenty of room for innovation. Facebook has been making a concerted effort to attract big brand advertisers. In April, the company announced that it had surpassed 2 million active advertisers. But most of them were small and mid-size marketers.

Facebook (FB) gaining traction with video ads

According to Verto Analytics, Facebook had 227 million unique users in the United States as of June 2015. That includes 151 million mobile users. The social networking company is changing its strategy to an app-based model. It has distributed use cases into different apps (Facebook flagship app, Facebook Messenger, WhatsApp, Instagram).

Analysts believe Facebook still has plenty of growth potential in video advertising, especially with respect to Instagram, Facebook Messenger, and WhatsApp. Rosenblatt Securities analyst Martin Pyykkonen said his bullish outlook on the stock was largely based on increasing traction with big-brand advertisers, Instagram, and auto-play video ads.

Rosenblatt believes Facebook is gaining traction with 30-second video ads as “they can deliver mass audience reach and improve advertising effectiveness measurement.

Facebook shares fell 1.14% to $97.27 in pre-market trading Wednesday.

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