Advertising sales on mobile devices have been exploding lately and Facebook (NASDAQ:FB), a relatively newcomer to the tech scene, has been one of the leaders of the charge.
Facebook’s earnings and revenue have both been consistently expanding at faster rates than Wall Street has predicted. Over the past 8 quarters Facebook has beaten the sell-side’s EPS consensus 6 times and only missed once. Facebook is set to report its second quarterly earnings report of the year on Wednesday, July 23rd after the market closes. 30 year old CEO Mark Zuckerberg has been aggressive at the helm of Facebook and has proven he is not one to be shy about his ambitions. Here’s what could be next for the social network.
Facebook has made strides since its flop of an IPO back in 2012. Company shares caught wind in their sails during the third quarter of last year when Facebook juiced up its rate of year over year revenue growth to 60%. That growth metric has only been drifting higher since.
After starting the year at $54.83, shares of Facebook have climbed 28% to $69.14. Much of the strength in the stock can be attributed to the company’s execution on mobile ad sales and monetization, but Facebook may also have an exciting future ahead. Mark Zuckerberg has been leveraging his company’s huge valuation to make several strategic acquisitions including the $19 billion headliner purchase of mobile messaging app WhatsApp.
Reports from back in April indicate that Facebook is looking to get involved in the hot mobile payments business next. Facebook hasn’t commented on its mobile payment plans, but having its own payment processing platform could get Facebook involved in peer to peer transfers, in app purchases, and could provide Google-like levels of data on users’ spending habits to assist in the targeting of advertisements that Facebook serves.
Speaking of fellow mobile internet ad provider Google (NASDAQ:GOOGL), Google made Wall Street’s revenue consensus look silly this quarter. In response to Google crushing on revenues despite the reported cost per click falling 6%, contributing analysts on Estimize.com have been going nuts with their revenue estimates for Facebook on Wednesday.
Estimize.com ranks and allows the sorting of analysts by accuracy, the analyst with the lowest error rate on Facebook is an anonymous information technology professional who goes by the username iMarcelo. Over 2 previously scored estimates on Facebook iMarcelo has averaged an error rate of 2.4%.
On Wednesday iMarcelo is calling for a huge quarter of 38c EPS and $2.880B on the top line, well ahead of the Estimize consensus on both profit and sales.
Estimize is completely open and free for anyone to contribute, and the base of contributing analysts on the platform includes hedge fund analysts, asset managers, independent research shops, non professional investors, and students.
This quarter 95 contributing analysts on Estimize.com have come to a consensus earnings expectation of 35c in earnings per share and $2.848B in revenue compared to a consensus of 33c EPS and $2.798B from Wall Street. The Estimize community expects Facebook to beat the Wall Street consensus by 2c (6%) per share and come in $50M (2%) ahead of revenue estimates.
Over the previous 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting Facebook’s EPS and revenue 5 times each. On Wednesday the Estimize community is expecting another considerable earnings beat from Facebook.
The Estimize consensus was more accurate than the Wall Street consensus 65% of the time last quarter on the coverage of nearly 1000 stocks. A combination of algorithms ensures that the data is not only clean and free from people attempting to game the system, but also weighs past performance and many other factors to gauge future accuracy.
Since the Estimize consensus is more representative of market expectations, on average Facebook’s earnings are more likely to move based on how they fall in-line relative to the Estimize consensus rather than the forecast from Wall Street. Statistically speaking when a company beats the Street’s consensus but fails to meet the market’s expectations as represented by the forecast from Estimize.com, the stock price tends to fall rather than rise in response to the report.
On Wednesday, contributing analysts from Estimize are expecting Facebook’s quarterly earnings come in at 35c per share.