Science
5 Predictions for Facebook's Highly Anticipated Earnings Call
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It has been anything but smooth sailing for Facebook as the company heads into its 2018 first-quarter earnings call after the markets close on Wednesday. The social media platform came under close public and government scrutiny after it was revealed that it had leaked as many as 87 million users’ data in the Cambridge Analytica scandal.
Despite this being one of Facebook’s most controversy-ridden quarters in history, analysts are predicting that the uproar likely did not put a dent in its revenue. This should highlight how overwhelmingly dominant the company is in the social media space — whether you think it’s a monopoly or are convinced Facebook is not a monopoly. Investors have their eyes on a couple of different metric this time around.
Inverse has rounded up five points that are expected to be mentioned in the April 25 report at 5 p.m. Eastern.
5. Facebook Is Still Making Bank
Regardless of the Cambridge Analytica fallout, Wall Street analysts predict the company to report a revenue of roughly $11.41 million. This 42 percent growth from last year was mostly driven by higher ad prices and strong demand for its targeted-advertising tools. According to the marketing firm Merkle, advertisers spent 48 percent more for ads on the platform in 2018 compared to last year. This keeps the company at the steady rate of growth reported in previous quarters.
4. Wall Street Is Looking for Engagement
However, investors might not be looking at all of those bankrolls when they’re assessing Facebook’s health. How many users log in to Facebook and how much time they spend scrolling through their feeds will likely be a major talking point during Wednesday’s call. Last quarter, the company reported that its number of daily active users in North America dipped for the first time in its history. CEO Mark Zuckerberg stated that he was planning on making changes to create “meaningful connections between people rather than passive consumption of content.” Investors will be looking to see if this paid off.
3. Affects of #DeleteFacebook
Facebook faced intense backlash across the internet when it came to light that a single psychological quiz was able to siphon tens of millions of users’ data. The #DeleteFacebook movement took off during the days following this scandal and like the name suggests, some users and companies permanently delete their accounts.
This coupled with the fact that the company announced it users spent 5 percent less time on the platform daily in February will likely make this an important topic of discussion.
2. Looming Government Regulations
Zuckerberg appeared before the Senate Judiciary and Commerce Committee earlier in April to answer questions about the company’s massive data leak. His testimony to lawmakers highlighted the company’s track record of lax enforcement of data regulation. This led to Facebook rolling out stricter rules to police data on the site and it will probably drive legislators to begin drafting laws to guard against something like this from happening again.
This might be brought up since the Congressional hearing is so fresh in the minds of investors, but actual regulations probably won’t be established in time for the next few quarters.
1. Has the News Feed Change Hurt or Helped?
Finally the company might address how its News Feed changes have been fairing. Zuckerberg stated that the company will be adjusting its algorithm to prioritize interactions between friends and family over posts by third-party news organizations. This change came in light of the fake news epidemic that took many social media platforms my storm during the 2016 Presidential Election.
Since Facebook’s News Feed is the site’s flagship feature, investors will likely be curious to see if this change has sparked any changes in engagement or ad revenue.
Predictions seem relatively positive compared to how much criticism Facebook has faced in light of Cambridge Analytica. But as a whole analysts will be looking for a solid plan that will pivot the company out of this rut and towards a successful future.
