Social media giant Facebook (FB) is set to release its fourth quarter and full year fiscal 2016 earnings report on Wednesday, February 1, after the closing bell of the trading session. Facebook posted a press release last January 3, stating the specific date the company would release its fourth quarter and full year 2016 financial results. For five straight quarters now, Facebook has exhibited strong and impressive financial growth in the company. What can investors expect from the upcoming earnings report from Facebook?
Zacks Investment Research has provided forecast, both for Facebook’s fourth quarter and full year 2016 earnings. The company is expected to report earnings per share increase to $1.13 with $8.40 billion revenue. If the company meets the forecasts for the latest earnings, this would mean a year-over-year growth of 91.37% and 44.53%.
Meanwhile, Wall Street posted expectations at $1.07 earnings per share, with a $7.62 billion revenue for the company.
From Facebook’s third quarter earnings, the company has seen its number of active users climb by 1.78 billion, which was around a 76 million, or 16% increase from the previous quarter.
Although Facebook is set to posts another financial growth for the quarter and full fiscal year, several analysts are still wary that Facebook might not be able to top its previous strong growth from the year-ago quarter. For the same period quarter a year-ago, Facebook saw a growth in its revenue at 44%.Even the company’s CFO David Wehner previously mentioned that Facebook is expecting its revenue to decline for the fourth quarter, given that they had a strong Q4 for 2015, which would be hard to beat.
“Over the past two years, we have averaged about 50% compound revenue growth in advertising. Ad load has been one of the three primary factors fueling that growth. Going forward, we expect to see ad revenue growth rates come down meaningfully,” the company stated.
At the late trading session on Friday, Facebook closed 0.45% down at $132.18 per share. Its market capitalization was at 380.97 billion. Although the stock was down on Friday’s close, it was still 4.05% higher, compared to last week’s performance, which closed at $127.04.
Facebook’s Relative Strength Index is currently at 76.0294, and has been above and around the overbought level 70 area since the beginning of the year.
So far, Facebook shares have performed strongly since the start of 2017. For the past two weeks, the company’s stock has surged by 11% and was up by 15% year to date. Facebook stock is also known to surge every after earnings report due to its consistent financial growth, with an exception from the company’s Q3 earnings report on November 2.
Upon the release of the third quarter results last November 2, 2016, Facebook stock plunged by 6.94% with a close of $120 per share. In spite of improved revenue, profits, and increased number of users, Facebook shares declined when the company warned that it was expecting a slower ad revenue growth in 2017 because it was approaching its ad limit.
Presently, Facebook has a Zacks Ranking at #2 (Buy), due to strong outlook for the company’s earnings report coming this Wednesday. As observed from the company’s yea-to-date performance, it is safe to invest in the company; especially it has been in the bull market for straight weeks and delivered well for five straight quarter earnings report.
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