Facebook, Inc. (NASDAQ:FB) Earnings After Bell

Facebook, Inc. (NASDAQ:FB) Earnings After Bell

Facebook, Inc. (NASDAQ:FB) Earnings After Bell

The world’s largest social media site is gearing up for Q3 earnings. Facebook FB is releasing its Q3 earnings report Wednesday, October 30th, after the bell and growth expectations are substantial.

FB is typically a big mover on earnings releases with an average move of 7.4% over the past 8 quarterly reports (5 up, 3 down). Zacks Consensus estimates display an EPS of $1.91 on revenues of $17.32 billion, representing year-over-year growth of 8.5% and 26.2%, respectively.

FB has been trading in a state of limbo since its last earnings release marginally slid the share price at the end of July when the firm illustrated a deceleration in user growth. Since the beginning of August, FB has been trading in a $15 range between $175 and $190.

FB is trading on the higher end of this range going into earnings, and investors are hoping the stock can bust back into the $200s.

Twitter TWTR released its 3rd quarter results last Wednesday after the bell missing both top and bottom-line estimates, which has plummeted the stock over 23% since. Snapchat SNAP beat both metrics and is up almost 5% since its earnings last week. As it stands, social media stocks have had mixed results.

The Business

2.1 billion people around the world use one of Facebook’s family of services daily, while 2.7 billion utilize one of these at least once a month, whether it be Instagram, WhatsApp, Messenger, or Facebook.

Facebook’s daily active user (DAU) and monthly active user (MAU) expansion have been slowing down in recent quarters with only 8% year-over-year growth in Q2 compared to 11% in Q2 last year and the 14% in 2017.

This slowdown in user growth was inevitable, with roughly 63% of the internet accessing world using at least one of Facebook’s services at a minimum of once a month. User growth will soon be a product of world population growth.

Facebook has been able to partially offset this slowing user growth trend with the appreciation of average revenue per user (ARPU), although policy headwinds could negatively impact this growth with regulatory changes focused on targeted advertising.

The FTC slapped Facebook with a $5 billion civil penalty earlier this year (impacting Q1 and Q2 results), the largest fine in the history of the agency. The fine was related to negligence with handling user data as well as ‘deceptive’ communication to consumers pertaining to user data utilization. Along with the massive fine, the FTC required Facebook to implement new privacy processes to ensure that this misstep doesn’t occur again.

Regulatory overhang remains a concern for Facebook moving forward. The company’s growth is decelerating, and the reliance on ARPU for topline appreciation increases. If regulatory bodies inhibit Facebook’s ability to produce targeted advertisements, the company’s growth could be significantly hampered.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 197.76.

The projected lower bound is: 180.98.

The projected closing price is: 189.37.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 74.9220. This is not an overbought or oversold reading. The last signal was a sell 7 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 56.54. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 75 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 107.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 7 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 14 period(s) ago.

Rex Takasugi – TD Profile

FACEBOOK INC A closed down -0.090 at 189.310. Volume was 2% below average (neutral) and Bollinger Bands were 9% narrower than normal.

Open     High      Low     Close     Volume___
191.690 192.530 188.470 189.310 13,574,874
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 187.70 184.35 179.87
Volatility: 34 29 35
Volume: 12,480,989 12,536,014 16,441,558

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FACEBOOK INC A is currently 5.2% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into FB.O (mildly bullish). Our trend forecasting oscillators are currently bullish on FB.O and have had this outlook for the last 9 periods.

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