Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
The COVID-19 pandemic has put a dent of Facebook’s advertising revenue as businesses turn conservative on their marketing spends. However, analysts are hopeful that Facebook will make a good recovery in the coming months. FB stock is rising now.
It is the time of the year where companies have started reporting their Q1 2020 earnings. Among the FAANG group, Facebook Inc (NASDAQ: FB) is to report its earnings report today along with Apple Inc (NASDAQ: AAPL) and Amazon.com Inc (NASDAQ: AMZN). Focusing on the social media giant, the FB stock price corrected 2.5% before Tuesday’s trade close. Today in the pre-market, the stock is 3.75% up.
The Facebook stock slipped below $185 levels giving a close at $812.91 levels with a market cap of $521 billion. So far, Facebook has lost over 15% of its market year-to-date amidst the broader market correction due to the coronavirus pandemic.
The COVID-19 pandemic has severely impacted businesses all over as they have ultimately decided to pull the advertising plugs. Businesses have decided to cut down their ad spent massively to conserve cash and this has directly impacted Facebook’s revenue stream to a huge extent.
Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) has already released its positive Q1 results. Facebook is expected to follow this trend.
Facebook Earnings: Expectations
Also, as per Wall Street expectations, Facebook is likely to report an EPS of $1.75 with a revenue of $17.5 billion in Q1 2020. Analysts say that the earnings of the company will decline by 7.6% YoY. However, they expect revenue to surge by 16.1%. In Q1 2019, Facebook reported an EPS of $1.89 and a revenue of $15.1 billion.
Despite the recent disruption, analysts are hopeful that Facebook holds a strong growth potential in months to come. In Q4 2019, Facebook revenue easily crossed analysts analysts’ estimates of $20.89 billion. There was a 25% revenue growth registered YoY in the fourth quarter.
As per analysts’ expectations, Facebook’s revenue can rise 8.2% to $76.5 billion in 2020. The sales are expected to grow further in 2021 by 23.9% in 2021 to $94.8 billion.
Facebook Working on Global Expansion
Facebook is aggressively working on growing its global footprint, particularly in Asia. As per Zacks Consensus Estimate, Facebook’s Monthly Active Users (MAU) in Asia have crossed 1 billion. Thus, Facebook has seen a growth of 9.3% YoY in its Asia’s user-base.
As a result, the advertising revenues of the company are likely to grow 22.2% pegged at $3.26 billion. On the other hand, the Zacks Consensus Estimate also predicts that Facebook’s advertising revenue in Europe will grow by 15.4% at $4.4 billion.
To expand in India, Facebook recently strikes a $5.7 billion deal with India’s largest telecommunications company Reliance Jio. Facebook announced that it has purchased a 9.9% stake in Reliance Jio at $5.7 billion which will help it expand its revenue stream. The two companies will be working on bolstering digital payments in India which could boost Facebook’s WhatsApp payment business.
Earlier this month, Facebook launched its “tuned” app for couples in the U.S. and Canada. Besides, it also launched its mobile gaming app dubbed “Facebook Gaming” for streaming and watching live gameplays.
Facebook decided to scale back its Libra cryptocurrency project earlier this month after facing several regulatory roadblocks. However, it has still kept the project alive and the Libra platform will be supporting government-sponsored stablecoins.