Facebook Stock in Focus Ahead of Earnings Next Week

Social media giant Facebook, Inc. (NASDAQ:FB) is among the most-watched companies in the world, and its quarterly earnings report is naturally highly anticipated among market watchers. The company is going to release the financial results on April 29, and its advertising revenue figure during the coronavirus pandemic is going to be in sharp focus.

Advertising Revenues in Focus

The advertising revenues will give a clear idea of the impact of the coronavirus pandemic on Facebook’s business and also on advertising spending patterns. Investors are obviously going to be focussed on the overall revenues, but it should be noted that advertising revenues constitute almost the entirety of it.

Year on year, change in advertising revenues will provide a clearest possible picture on whether the coronavirus pandemic has affected Facebook’s business. Due to the lockdowns, plenty of retailers have temporarily closed their stores and customers are also staying at home. In such a situation, advertising spends might take a hit. It should be noted that during the conference call for Q4 2019, the social media company had stated that it expects ad revenues to decelerate in Q1 2020. The company had revealed that it expects a ‘low to mid-single-digit percentage point’ when compared to Q4 2019. 

On the other hand, Facebook had projected total expenses of $54 billion to $59 billion for 2020, and while the yearly expenses are generally lower than its projections, this time, it may be different. Due to the coronavirus crisis, the company has had to deploy extra sources and spent more on sales activities.

The impact of potentially lower ad spend on Q1 might not be as big, but the same for the next quarter could be huge. Hence, Facebook’s projections for the second quarter are going to be watched closely by investors as well. Analysts expect revenues to rise 5.8% year on year, and that reflects a pretty telling effect.

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