Q1 Facebook Earnings Its All About the Ads
All focus will be on the ad revenue for Facebook Q1.
Share this:
When:
April 29th After market close
Q1 Expectations:
- Revenue $17.82 billion
- EPS $1.18
Its All About the Ads
Facebook is both benefiting and being battered by coronavirus. On the one hand Facebook is expected to report a surge in engagement levels on many of its services. Usually an increase in active users goes hand in hand with a rise in advertising revenue.
Facebook is both benefiting and being battered by coronavirus. On the one hand Facebook is expected to report a surge in engagement levels on many of its services. Usually an increase in active users goes hand in hand with a rise in advertising revenue.
However, its ad revenue is expected to take a big hit. This is important because ad revenue accounts for nearly all of Facebook’s total revenue. In lock down many firms are cutting costs and ad spending is being slashed. Year over year ad revenue figures will help gauge the degree that ad spend is taking a hit.
In Q4 Facebook revenue increased 25% yoy. Even before the coronavirus outbreak Facebook had said that they expected a deceleration in Q1 yoy revenue growth to around 20% -24%. This is now out of date and analysts’ expectations are for revenue growth of 16.9%.
In Q4 Facebook revenue increased 25% yoy. Even before the coronavirus outbreak Facebook had said that they expected a deceleration in Q1 yoy revenue growth to around 20% -24%. This is now out of date and analysts’ expectations are for revenue growth of 16.9%.
Does Snap’s performance bode well for Facebook?
However, it is worth considering that Snap, which reported earlier this week and whose dominant revenue stream is also advertising reported better results than expected. A 44% jump in revenue was well received by the market and sent the stocks soaring 27% and Facebook piggy backed the rally 6% higher. That said, on the earnings call Snap confirmed that “many advertising budgets declined due to covid-19”, which suggests that the jump in revenue was a owing to a strong start to the year. Which doesn’t necessarily bode well for Facebook.
However, it is worth considering that Snap, which reported earlier this week and whose dominant revenue stream is also advertising reported better results than expected. A 44% jump in revenue was well received by the market and sent the stocks soaring 27% and Facebook piggy backed the rally 6% higher. That said, on the earnings call Snap confirmed that “many advertising budgets declined due to covid-19”, which suggests that the jump in revenue was a owing to a strong start to the year. Which doesn’t necessarily bode well for Facebook.
Q2
Given that lock down only kicked off in the last few weeks of March, the biggest hit to ad spend is likely to come in Q2. Meaning forward guidance will be key. Analysts have predicted that Facebook’s revenue could rise just 5.8% next year as company’s struggle to recover from the Covid-19 crisis. Will Facebook be more optimistic? Or will they decline to comment given the lack of visibility?
Given that lock down only kicked off in the last few weeks of March, the biggest hit to ad spend is likely to come in Q2. Meaning forward guidance will be key. Analysts have predicted that Facebook’s revenue could rise just 5.8% next year as company’s struggle to recover from the Covid-19 crisis. Will Facebook be more optimistic? Or will they decline to comment given the lack of visibility?
Chart thoughts
After touching 52 week low on March 18th $137.1, stock has gained 30% in less than a month. The trend is clearly bullish with the path of least resistance pointing higher.
Immediate resistance can be seen at 184.60 (yesterday’s high) followed by 196.00 (high on 3rd March)
Immediate support can be seen at 180.50 (trend line) prior to 168.38 (low 21st April).
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Nikkei threatens breakout as tech rebound broadens
Breakouts across the SOX and Nasdaq are being matched by rebounds across Asia, with the Nikkei now threatening to join the move.
S&P 500, Nasdaq 100 Forecast for the Week Ahead
A hawkish Fed and 10-Year Notes on the verge of a push above 5%, yet stocks have so far shrugged off that fear. But can it continue?
Hang Seng Tech rout nears make-or-break zone
The technical damage is clear, but with Hang Seng Tech now deeply stretched and approaching major support, the risk-reward is becoming more two-sided.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.