It sounds like a broken record, but Facebook Inc. continues to do just that: break revenue records. Despite federal regulators worrying about its business practices, threats of advertising boycotts from parties aggrieved by its privacy policies, and a pandemic, the social media giant is expected to release another staggering quarterly result on Wednesday.
Facebook FB, + 1.97% is firing at full throttle due to – what else? – dominance in the digital advertising market, which is expected to show growth as the pandemic slows. Facebook and Google parent Alphabet Inc.GOOGL, + 2.28% GOOG, + 2.33% will benefit more from the reopening (from a user and advertiser perspective), Evercore ISI analyst Mark Mahaney said in a note on 15 of April. At the same time, Facebook has increasingly diversified its revenue mix, adding sales of Oculus VR headsets and Portal video chat devices. Non-ad revenue soared 156% to $ 885 million in the fiscal fourth quarter. It doesn’t end there: On Monday, Facebook announced new audio products to compete with Clubhouse and podcasts, and is proceeding with a kid-friendly version of Instagram. Facebook’s growth is even more remarkable in a political landscape plagued by federal and state antitrust lawsuits, as well as mounting investigations on Capitol Hill. On April 15, the Judiciary Committee of the US House of Representatives approved a scathing 450-page report advocating legislation to curb the expansive powers of big technology. The report, released in October, recommends a review of the antitrust law to counter the growing influence of Facebook, Google, Apple Inc. AAPL, + 2.25%, and Amazon.com Inc. AMZN, + 1.72%. Speaking of Apple, that tech giant plans a change to its iOS 14 software that will have an effect on Facebook and others. The change will affect a unique device identifier on each iPhone and iPad called IDFA or the “identifier for advertisers,” which gives users more privacy and potentially disrupts the digital advertising ecosystem. See also: Why is Facebook considering an antitrust lawsuit against Apple? . What to Expect Earnings: Facebook is expected on average to post earnings of $ 2.34 per share, up from $ 2.07 per share expected at the beginning of the quarter, according to 42 analysts surveyed by FactSet. Facebook reported earnings of $ 1.71 per share in the same quarter last year. Estimize, a software platform that uses crowdsourcing of hedge fund executives, brokerages, buying analysts and others, demands earnings of $ 2.33 per share. Revenue: Wall Street expects revenue of $ 23.6 billion from Facebook, according to 34 analysts surveyed by FactSet. That’s more than the forecast of $ 22.3 billion at the beginning of the quarter and $ 17.7 billion a year ago. Estimize expects revenue of $ 23.6 billion. Stock Movement: Facebook shares have declined after its last two earnings reports, but rose after five of the last eight reports. Shares of Facebook rose 11% in 2021 and 70% in the last 12 months, until the market close on Monday. By comparison, the broader SPX index of the S&P 500, + 1.39% has gained 11% and 47%, respectively. What analysts say, Cowen analyst John Blackledge, who raised his price target on Facebook shares to $ 360 from $ 350 in an April 14 note, projects first-quarter revenue of $ 24.1 billion, a 36% year-over-year increase and 2% above consensus on strong digital ad sales. Wedbush Securities analyst Ygal Arounian is not fully convinced of the business initiatives Facebook is building on its platform, such as Facebook Shops and Instagram Reels. “Facebook is the most exposed to privacy risks, particularly around Apple’s app-tracking transparency efforts that will limit privacy. [IDFA]”Arounian said in an April 13 note that lowered Facebook’s stock rating to neutral from outperformance and lowered its price target to $ 340 from $ 375.