CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Facebook shares hinge on active user growth and revenue outlook

Article By: ,  Financial Analyst
April 25, 2018 5:00 PM
Facebook shares hinge on active user growth and revenue outlook

After the recent furore over a UK political consultancy’s access to the data of at least 50 million Facebook users, Facebook’s first quarter results, coming after the U.S. market closes on Tuesday, could sound an early warning about the vast business of digital marketing that relies on gaming personal privacy. According to a consensus forecast compiled by Thomson Reuters, earnings per share of $1.35 are expected with revenue of $11.41bn, representing rises of 30% and 42%, respectively.

Even if Facebook quarterly income and revenue meet expectations though, Wall Street attitudes could harden if the #deletefacebook meme ties in with further slowdowns among North American and European active users like those seen in the fourth quarter. User data trends will therefore be scrutinised again. Q4 daily active users largely plateaued at 1.4 billion and the growth rate of monthly active users also slowed to 2.13 billion. Changes to Facebook’s news feed also meant that time spent on Facebook declined by 50 million hours every day in Q4, making that metric another important watch point for Q1. The network’s rapid roll out of consent opt-ins in the wake of its privacy debacle may have an impact on engagement.

Given that any financial impact stemming from a decline in users would lag active user data, revenue forecasts for the forthcoming quarter, rather than Q1, will be a litmus test. Wall Street analysts already project Q2 revenues at $12.95bn, up 39% on the year, pointing to Facebook’s weakest second-quarter growth rate since 2015. For similar reasons, share price reaction to Facebook’s earnings report is more likely to hinge on the group’s revenue expectations than on any other measure.

With Facebook still in crisis mode, executives will have a tough time stoking much interest from investors on much else tonight though there are signs that fallout from the scandal, if any, was contained. Several U.S. brokerages have tracked ad spending trends over the quarter and readings point to an 11% decline quarter-quarter, well within seasonal norms. That forecast also nearly matches consensus forecasts for a quarterly fall of 12%, according to Thomson Reuters. Similar indications point to ad prices rising 6% compared to the last quarter of 2017, driven by a 9% rise in mobile ad prices.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024