Launched in February 2004, Facebook is a social networking service founded by Mark Zuckerberg with his college roommates and fellow students Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes. Early investors include Microsoft and Hong Kong tycoon Li Ka- shing, through his namesake charitable foundation. Facebook’s US$16 billion initial public offering in May 2012 generated huge investor interest although the shares subsequently slumped in price.
Eyes on mobile for Facebook’s Q2
Investors are focusing on signs that Facebook can keep growing advertising revenue, especially on mobile devices, when the world’s largest social media company reports second-quarter results on Wednesday after the stock market closes.
WHAT TO WATCH FOR: Facebook’s transition to mobile had plagued the company in the months leading up to and shortly after its May last year initial public stock offering. But analysts are now optimistic about Facebook’s mobile prospects.
Cantor Fitzgerald analyst Youssef Squali thinks mobile growth “should continue unabated,” accounting for about 34 per cent of total advertising revenue in the second quarter, up from 30 per cent in the first. But he warned that a weaker ad market in Europe could hurt Facebook’s international revenue.
Sterne Agee analyst Arvind Bhatia also sees promise in video ads for Facebook, though the company has not started offering those yet. Facebook recently added a video service to its photo-sharing app Instagram, a “first step” before video ads, Bhatia said.Wedbush analyst Michael Pachter is also betting on video ads coming soon to Instagram.
“We believe many Internet and mobile device users have become accustomed to seeing ads before, during, or after accessing video content,” he wrote in a note to investors.
WHY IT MATTERS: Facebook is the world’s No. 1 social media company, with more than 1.1 billion users. Its results can help assess the health of the overall online and mobile advertising environment.
WHAT’S EXPECTED: Analysts, on average, are expecting earnings of 14 US cents per share on revenue of US$1.62 billion, according to a poll by FactSet. Facebook has not provided earnings or revenue guidance for the quarter.
LAST YEAR’S QUARTER: In its first quarter reporting as a public company, Facebook posted a loss of US$157 million, or 8 US cents per share, on revenue of US$1.18 billion.