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Facebook (FB) Q1 Earnings Preview

Facebook (FB) will release its first-quarter results on April 29 after the market closes. The earnings update will provide the first impetus of the coronavirus outbreak impact on advertising spending. Analysts expect a slump in the advertising industry’s revenues for 2020 as most companies cut their advertising budgets. 

In the Q4 of 2019, Facebook reported revenue of $21.1 billion a 24.7% growth while the earnings per share came at $2.56. Facebook had 90 million new monthly users and a 6.7% increase in net income.

FB will experience a significant weakening of its ad business, especially in countries most affected by coronavirus. According to some reports, advertising auction prices fell by 20% in February and March, and also see a steep decline in conversion rates. Facebook also cancelled plans to launch ads in WhatsApp

Globally, there are over 2.50 billion monthly active users (MAU) for December 2019, and some 2.26 billion active mobile users. 1.66 billion people log onto Facebook daily and are considered daily active users (DAU) for December 2019.

What to Expect from the Facebook Q1 Earnings

Facebook expected to report quarterly earnings of $1.78 per share (EPS), which is a year-over-year change of +109.4%. In Q4 2019, the biggest social network company reported $2.56 earnings per share. 

Analysts expect Facebook’s revenues up to $17.42 billion, which is lower than $21.08 billion during the fourth quarter of 2019 but 15.6% up from the 2019 quarter.

Facebook New Products

Facebook announced a new video calling feature. The new feature includes Messenger Rooms, which will allow Facebook and Messenger users to create group video calls of up to 50 people. The Messenger video calls were limited to eight people.

A new application for couples also launched, the Called Tuned, which allows couples to exchange messages, send music, and create a digital scrapbook. For now, it is available for download only in the U.S. and Canada. 

Facebook also introduced a new gaming application focused on watching and making game live streams, which is possible due to a function called “Go Live”. Besides, it includes casual games and provides access to gaining communities. Currently, it is available for Android users. 

Facebook Recent Developments

Facebook invested $5.7 billion to Indian internet company Jio Platforms, buying a 10% stake and becoming the largest minority stakeholder. Jio is a telco operator that covers all the 22 telecom circles in the country. Jio only uses LTE and voice-over-LTE to provide their services. The deal focus will focus on the 60 million micro, small and medium companies in India, 30 million small merchants, 120 million farmers, and millions of small and medium enterprises in the information sector, in addition to empowering people seeking various digital services.

Facebook Technical Analysis

Facebook is 7.60% lower in 2020. On January 29 FB hit the all-time high at 224.20 but during the coronavirus outbreak sell-off lost over 37% down to 137.62. The Facebook stock managed to gain over 37% since the March lows. The recent rebound broke above the 50-day moving average and now approaches the 200-day moving average, which might attract more buyers.

On the upside, the initial resistance for Facebook stock stands at 190, the daily high. If the price breaks above, then it might challenge the 200-day moving average at 191.34. In case of a bullish breakout, then the next supply zone stands at 193.26 the 100-day moving average.

On the flipside, immediate resistance for FB will be met at 180.83 the daily low. The 50-day moving average at 177.15 will provide the next support zone. If the stock price breach that level then the next target would be at 168.50 the low from April 21. 

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Facebook price chart

Facebook (FB) Q1 Earnings Preview
Facebook (FB) Q1 Earnings Preview

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