Earnings Breakdown – Facebook $FB

Earnings Breakdown - Facebook $FB

Facebook, Inc. (FB) is slated to report 3Q 2015 earnings after the bell on Wednesday, November 4th. The actual results are expected to come through at approximately 4:05 p.m. EST with a conference call to follow at 5:00 p.m. available at Facebook Investor Relations.  The social networking company’s earnings release could have a direct impact on Linked-In (LNKD), Twitter (TWTR), and online game-maker Zynga (ZNGA).


Outliers & Strategy

Key measures:

  • Non-GAAP Earnings Per Share (EPS)/Earnings Per Share (EPS) Excluding Items: These measures are typically the same and comparable to estimates. Analysts expect $0.52 (range $0.47 to $0.55). (Source: Yahoo! Finance)
  • Revenues: Analysts expect an increase of 36.4% y/y to $4.37 bln (range $4.25 bln to $4.43 bln).
  • Mobile Monthly Active Users: Mobile MAUs growing similar the average of Q1&2 at 23% y/y would be 1.38 bln.
  • Monthly Active Users: MAUs growing similar the average of Q1&2 at 13% y/y would be 1.52 bln.
  • Daily Active Users: DAUs growing similar the average of Q1&2 at 17% y/y would be 1.01 bln.
  • Facebook’s P/E 107.2; P/B 7.5; P/S 19.9; P/CF 45.5. Given the revenue growth, a P/S between 4 and 8 would show value.
  • Analysts view of Facebook with 46 Buy, 3 Hold, and 2 Sell ratings. (source: MarketBeat.com)
  • Insiders have sold a net 1,096,663 shares in the last three months and a net 9,365,278 shares in the past year. (source:NASDAQ.com)
  • Facebook shares have a 1-day average price change on earnings of 4.42%. Options are pricing in an implied move of 5.44%.

Recent News

  • 10/30: JMP Securities reiterated an Outperform rating on Facebook on anticipation that Q3 results will be ahead of consensus given the ramping of Instagram monetization,” according to a post on Benzinga.com.
  • 10/22: SunTrust Robinson Humphrey maintained a Buy rating on Facebook with a price target of $125 noting solid growth being driven by mobile. The potential inflection points are: 1. The Instagram rollout – MAUs crossing the 400 million mark 2. Continued video adoption and new targeting and analytics 3. The “Buy Button” ecommerce 4. New ad units – DPA and Lead Ads,” according to a post on Benzinga.com.
  • 10/09: Credit Suisse reiterated an Outperform rating on Facebook and raised the price target to $115 from $110, based on advertising momentum in things such as “premium video” and Instagram, even though the company will probably sell its forthcoming virtual reality headset at a loss,  according to a post on Barron’s.com.
  • 09/30: Taiwan-based publication Want China Times suggesting the social network may start to operate in China at some point after a photo op Facebook CEO Mark Zuckerberg had with Chinese president Xi Jinping, according to a post by Barron’s.com.
  • 09/17: Cowen & Co. says data gathered by comScore confirms Facebook is still king of the hill in terms of time spent on the mobile Internet, according to a post by Barron’s.com.
  • 09/04: Axiom Capital Management said there has been a “meaningful increase’ in ads on Instagram in recent weeks but remains concerned about how WhatsApp can actually monetize its users, according to a post on Barron’s.com.

Technical Review

Facebook stock seems to make a new all-time high every quarter. November has shown some brief softness the last two years but the 200-day moving average hasn’t had to act as support often. Point and figure technicians are targeting $130 with their trend line similar to the 200-day moving average. (Chart courtesy of StockCharts.com)



Analysts remain bullish on Facebook despite the high valuation ratios with excitement increasing around Instagram. Insiders show some selling. The company has beaten estimates by an average of 3c the last four quarters. Estimize consensus for Non-GAAP EPS of $0.54 on revenue of $4.40 bln compares to analyst consensus of $0.52 on revenue of $4.37 bln. Traders also focus on the “user” data where mobile users are viewed as the growth driver, especially in Asia.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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