Will Facebook (FB) Deliver Stellar Earnings Again In Q2?
Zacks Investment Research | Jul 21, 2016 11:18PM ET
Facebook, Inc. (NASDAQ:FB) is set to report second-quarter 2016 results on Jul 27. The company reported a positive earnings surprise of 29.55% in the last quarter. It has also delivered an average positive earnings surprise of 11.80% over the trailing four quarters. Let’s see how things are shaping up for this announcement.
Things to Watch Out for this Time
Investors ’area of interest again this quarter will be online and mobile advertising revenues. Facebook has gained significant traction in its mobile ad business within a very short span of time. Mobile monetization has increased with a higher number of marketers, continuing investment in new products and robust performance of its newsfeed ads. Notably, in the first quarter, mobile ad revenues grew 75% to $4.2 billion representing 82% of total ad revenues. However, Facebook needs to tread cautiously so as not to irritate users with too many ads.
After opening its ad platform to worldwide advertisers last year, Instagram has emerged as an important cash cow for Facebook. Again there were no exact numbers for the last reported quarter with regard to contribution from Instagram but Facebook said that the platform has now over 200,000 advertisers. The fact that the ad platform has been well received is reflected in increases in both overall ad impressions and average ad prices. Average price per ad increased 5% from the year-ago quarter and ad impressions grew 50% due to increases in mobile impressions. Investors will once again be focused on Instagram’s money minting abilities to boost overall ad revenues for the company.
Moreover, Facebook has been aggressively promoting “Live” in order to capture the opportunity presented by ever increasing video viewing on social media platforms. Leading research firm, Forrester Research projects digital ad revenues to touch $12.6 billion by 2019. The company has signed deals with Internet and media celebrities to churn out more content for its Live platform. However, in the aftermath of the racial tensions that erupted across U.S, after graphic videos of two Afro Americans shot dead by police went viral on the network, Facebook has made FACEBOOK INC-A Quote
Stocks to Consider
Here are a few stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:
Innoviva, Inc (NASDAQ:INVA) with an Earnings ESP of +25.00% and a Zacks Rank #1.
GoDaddy Inc. (NYSE:GDDY) with an Earnings ESP of +50.00% and a Zacks Rank #3.
Amazon.com, Inc (NASDAQ:AMZN) with an Earnings ESP of +37.72% and a Zacks Rank #3.
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