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Facebook (FB) Q4 Earnings Preview: Monthly Active Users, Revenue & More

Benjamin Rains

Shares of Facebook FB dipped over 2% during regular trading Tuesday, only a day before the firm is set to report its Q4 earnings. So, let’s dive into what investors should expect from the embattled social media firm after the closing bell Wednesday.

Quick Overview

At this point, most casual followers of the news understand that Facebook had a terrible 2018. FB stock tumbled following its Cambridge Analytica scandal and eventually plummeted in the second half of the year after the firm announced that it committed billions of dollars to clean up and safeguard its platform. Facebook said these initiatives would likely cause its operating margin to fall into the “mid-30s on a percentage basis” over a more than two-year period—its operating margin fell from 50% in Q3 2017 to 42% last quarter.

Despite worries about increased government scrutiny and intervention, Facebook seems likely to remain a digital advertising powerhouse, along with Google GOOGL, for years to come. Plus, Facebook plans to expand its video offerings as the entertainment industry moves more toward the Netflix NFLX and Amazon Prime AMZN model.

Facebook stock closed regular trading down 2.22% at $144.19 a share, which represented a roughly 34% downturn from its 52-week high of $218.62 per share.

Q4 Estimates

Facebook’s Q4 revenues are projected to climb 26.2% from the prior-year quarter to hit $16.37 billion, based on our current Zacks Consensus Estimate. Investors should note that this would mark a slowdown compared to Q3’s 33% top-line expansion, Q2’s 42% climb, and Q1’s 49% surge. Meanwhile, FB’s adjusted Q4 earnings are projected to slip 1.36% to touch $2.17 a share.

User Growth

Wall Street will also pay close attention to Facebook’s user totals. Facebook’s monthly active user base in the U.S. & Canada is projected to grow by roughly 1.6% to 242.93 million, based on our most updated NFM estimates—this region accounted for 49% of Q3 revenues.

On top of that, FB’s European MAU total is expected to climb 2.4% to reach 378.79 million. This would also mark an increase from Q3 2018’s 375 million and might be a good sign after three straight quarters of sequential declines in the region that accounts for roughly a quarter of Facebook’s revenues.  

Overall, Facebook is projected to see its global MAU total jump roughly 9.4% from 2.13 billion in Q4 2017 to reach 2.33 billion, with much of this growth driven by the Asia-Pacific and “Rest of World” regions. Our NFM projection would see the social media firm nearly match last quarter’s MAU growth.

Bottom Line

Facebook is scheduled to release its Q4 financial results after the closing bell Wednesday. Meanwhile, fellow market giants Microsoft MSFT, Boeing BA, Qualcomm QCOM, Alibaba BABA, Visa V, Tesla TSLA, and others are set to report as well.

Facebook is currently a Zacks Rank #3 (Hold) and it might have to blow away investors to see a post-earnings bump over the next few days. So, make sure to come back here for a complete breakdown of FB’s actual Q4 results.

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