Facebook, Google bulls getting reason to run?
After a terrible turn out from some of the chipmakers last week, with Intel (INTC), SanDisk (SNDK) and Advanced Micro Devices (AMD) all missing their first quarter profit expectations, internet companies are on deck and hoping to turn things around for the tech sector.
This week, 19 information technology companies from the S&P 500 (^GSPC) will release results. Two of the most closely watched this earnings season will be Facebook (FB) and Google (GOOGL). At Estimize, we are expecting both companies to surpass the Wall Street consensus.
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On Wednesday, the Estimize community expects Facebook to post earnings per share (EPS) of $0.44, 4 cents higher than the Wall Street estimate, indicating year-over-year (YoY) growth of 29%. Investors will be focusing on user engagement metrics such as monthly active users (MAUs) and daily active users (DAUs). Last quarter, DAUs outpaced MAUs, and average time spent on the site per day also increased.
Mobile in particular is a crucial growth area for the social media company, with both daily and monthly mobile users increasing over 25% in the fourth quarter. While there have long been concerns that the U.S. market for Facebook is completely saturated, and expanding into tougher markets and demographics will be costly and not as profitable, the company has allayed those fears by putting up great results for the last several quarters.
Elevated levels of spending have also caused concern, but investments in mobile payments and third party app integration on the platform seem to be paying off. Megacap internet company, Google, will also be out with results on Thursday. While at Estimize we are looking for EPS of $6.81, an 18 cent beat against the Street, expect a less upbeat report from this multinational. Results from Google will most certainly be negatively impacted by the stronger dollar, and the deceleration of paid clicks is expected to continue. Add to that, Google’s European antitrust case, which will be a focus this quarter.
The European Commission officially filed a complaint against the company for favoring it’s own comparable-shopping service over rival services on it’s search engine. If found guilty, the company could be forced to change its search algorithms, possibly making the services less valuable. Google currently owns 88% of the global search market, and an even higher 90% share in Europe.
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