Fb – Fb earnings nonetheless flourishing amid pandemic, financial slowdown and antitrust scrutiny
Fb Inc. has been in a position to retain a Teflon sheen on Wall Street with a succession of blowout quarters of promoting income.
Neither a ravaging pandemic, financial meltdown nor antitrust lawsuit by the Federal Commerce Fee have blunted the momentum of the social-media large. And analysts count on extra of the identical Wednesday, when Fb FB studies its fiscal fourth-quarter earnings.
Analysts’ gusto for Fb is closely rooted in gross sales to greater than 10 million advertisers and a flourishing digital financial system throughout the pandemic, in addition to diversification into new product classes corresponding to Instagram Reels and Fb Outlets.
To make sure, there are issues. Antitrust and political danger stay acute, particularly in mild of the Jan. 6 assault on the U.S. Capitol and social media’s position in serving to foment the riot. The efforts of Fb and different social-media giants like Twitter Inc.
to tamp down misinformation and hate speech coursing over their digital platforms additionally lingers.
Fb additionally faces diminished time spent on the location within the U.S., the place each common go to length and pages per go to are dropping, in line with Ed Lavery, director of investor options at knowledge supplier SimilarWeb. He notes the typical go to time in December dropped beneath 13 minutes for the primary time since he started monitoring the metric in December 2017.
Nonetheless, buyers count on massive positive aspects within the fourth quarter and past, after the stock grew 33% in 2020 to push Fb’s market capitalization close to $800 billion. Analysts count on Fb income and revenue to develop almost 25% within the fourth quarter on common, in line with FactSet.
Earlier this week, BMO Capital Markets analyst Daniel Salmon elevated his income estimates in fiscal 2020 ($84.55 billion), 2021 ($103.1 billion) and 2022 ($126.1 billion) due to “strength in online ad spending, incremental ad demand due to commerce native functions, and higher other revenue (2022), which accounts for greater payment services revenue.” Salmon additionally raised EPS estimates to $9.40 in 2020 (vs. $9.29); to $9.87 in 2021 (vs. $9.58); and to $13 in 2022 (vs. $11.97).
What to anticipate
Earnings: Analysts polled by FactSet on common count on earnings of $3.15 a share, which might be a rise from $2.56 a share within the fourth quarter of 2019. Regardless of an FTC investigation into alleged anticompetitive enterprise practices, Fb’s estimate has risen from $2.64 a share on Sept. 30.
Contributors to Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts in addition to buy-side analysts, fund managers, firm executives, lecturers and others, are additionally projecting earnings of $3.15 a share on common.
Income: Analysts on common count on Fb to report $26.25 billion in fourth-quarter income, in line with FactSet, up from $21.08 billion the 12 months earlier than. Estimize contributors are additionally anticipating income of $26.2 billion.
Stock motion: By way of Friday, shares are up 26% over the previous 12 months, with a lot of the positive aspects coming at first of the pandemic, when People have been confined at dwelling and turned to Fb to socialize and get information. The S&P 500 index
has elevated 17% up to now 12 months. At $777.2 billion, Fb’s market value is greater than that of media giants Walt Disney Co.
and Comcast Corp.
What analysts are saying
— “We estimate Facebook’s 4Q total revenue will grow +28% y/y to $27 [billion], which is moderately above FactSet’s reported consensus of $26.27 billion (+25% y/y) and represents a notable acceleration.” — Stifel analyst John Egbert, in reiterating a purchase ranking and price goal of $340 on Jan. 22.
— “We expect vertical integration for e-commerce and more server-to-server integrations for advertising to help drive a narrative about Facebook having greater control over its revenue destiny.” — BMO Capital Markets analyst Daniel Salmon, in elevating his ranking to outperform and price goal of $325 from $270 on Jan. 19.
— “On a macro level, we expect online ad spend to accelerate in 2021, driven by a GDP-driven ad market recovery, accelerated secular shift from offline to online commerce, rollout of 5G smartphones (enabling new internet experiences), and TV cord cutting (enabling connected TV advertising).” — MKM Companions analyst Rohit Kulkarni, whereas reiterating a purchase ranking and $330 price goal on Jan. 19.
— “Investor fatigue round [Facebook] is bigger than for the remainder of FANG, partly attributable to elevated regulatory issues and in addition as a result of FB has much less general enterprise diversification than Google
Lawsuits from the FTC and state AGs will now be heard by the identical choose, and may very well be consolidated down the road. Whereas we now have not heard goal trial dates, we proceed to consider that unwinding Instagram (2012) and WhatsApp (2014) acquisitions is extremely unlikely.” — J.P. Morgan analyst Doug Anmuth, whereas sustaining an chubby ranking and price goal of $330 on Jan. 19.