Facebook Inc. is scheduled to report its fourth-quarter and full-year 2019 results after the market closes Wednesday. Here are the key points to watch:
REVENUE FORECAST: Facebook is expected to post revenue of $20.9 billion for the quarter and $70.5 billion for the year, according to FactSet, up from $16.9 billion in the fourth quarter of 2018 and $55.8 billion for that year.
EARNINGS FORECAST: Analysts polled by FactSet expect Facebook’s quarterly profit will be $2.53 a share, rising to $7.3 billion from $6.9 billion a year earlier. But earnings for the year are anticipated to be $8.75 a share, down slightly as year-over-year profit is expected fall to $18.3 billion from $22.1 billion, largely because of a $5 billion privacy settlement with the Federal Trade Commission.
WHAT TO WATCH:
—DRAMATIC COMPANY, STEADY RESULTS: If analysts’ expectations are met, Facebook will report diminishing cost growth and healthy results across its advertising business, which is the only one that matters. Concerns about the health of the main Facebook app have receded, with engagement and revenue growth from the core newsfeed product surprising analysts last quarter, even as the company has remained in the headlines over regulatory and privacy issues. Facebook and Alphabet Inc.’s Google have steadily increased their dominance of the digital advertising market in recent years, and this quarter isn’t expected to be any different.
—INSTAGRAM DECELERATION: While consistently impressive, the pace of Instagram’s revenue growth appears to be slowing, according to data from digital-marketing firm Kenshoo, which estimates platform-specific spending that Facebook itself doesn’t reveal. While Kenshoo’s estimate of 22% year-over-year revenue growth for the image-based social platform is below the industry average, it is still quite good. Meanwhile, eMarketer estimates that Instagram’s user growth in the U.S. will have slowed from 10.1% in 2018 to 6.7% in 2019, with older demographics not picking up the app as quickly as previously forecast. Any guidance from the company about the state of Instagram’s business will be watched closely.
—NEW BUSINESS FRONTIERS: With advertising holding steady at 98.4% of Facebook’s revenue, finding new “surfaces” to advertise on is a challenge. Expect analyst interest in services such as Facebook Marketplace, Instagram Checkout and features offered by Messenger and WhatsApp—especially because Facebook has backed off the plans to monetize WhatsApp through ads. And while the Facebook-backed Libra cryptocurrency project isn’t looking likely to meet Facebook’s initial 2020 launch target, the company’s interest in money transfers is alive and well.
Write to Jeff Horwitz at [email protected]
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