On November 2, Facebook Inc. (NASDAQ:FB) will release its third quarter earnings report. The expectations are high that the social media giants will deliver yet another quarter with increased earnings as they did over the last 4 quarters by beating analysts’ all estimates. Bolstered by surging revenues, the growing popularity of Facebook Live and the recent debut of a food-delivery service, shares of Facebook rose 1.5% Friday, finishing 3% above Monday’s opening price. Who was the biggest beneficiary? Needless to say, it would be Mark Zuckerberg, Facebook’s co-founder and largest individual shareholder. Zuckerberg’s earnings increased by $1.6 billion in a week which made his net worth soar to a sky high estimated amount of $56.6 billion. Sitting on the list of ‘The World’s Billionaires”, Zuckerberg is now the 5th richest person in the world, right after Warren Buffett.
Wall Street expects Facebook to report earnings per share of 97 cents based on estimated revenue of $6.92 billion. This translates into a 70% year-over-year growth in profits and a 50% expansion in sales. Over the last three quarters, Facebook’s earnings have beaten expectation by an average of 20%. Strong top and bottom line numbers, constantly increasing user base and traffic as well as impressive advertising have made them the standout social media stock on Wall Street and this is one of the key reasons why analysts remain confident about Facebook doing even better in the future. This year, business is projected to bring in about $7 billion in revenue, with strong growth expected in video advertising.
The other reason to look at positive side of things are the additions of new features that will increase the time users are spending on the site which will increase their ad revenues significantly. Last week, the social media giants had added a food-delivery feature that lets people order food straight from pages of the restaurant becoming 12,000th way to buy dinner online in 2016. Andrew Bosworth, Facebook’s VP of ads and pages, tells The Wall Street Journal the feature is their latest answer to the question “How can we make Facebook more useful in your everyday life?” and that it works with any eatery that’s already signed up with Delivery.com. For now, it has also promised that user’s order histories won’t be mined for ads, but wouldn’t you rather see last week’s delicious food over a sponsored post?
As reported by Forbes, “Facebook’s ballooning market cap has not only created wealth for Zuckerberg alone. Co-founders Eduardo Saverin and Dustin Moskovitz also had a lucrative week; they earned each earning about $200 million and $300 million respectively, from their stakes in the business.” When it comes to the Analysis of a Stock, Price Target plays a vital role. 43 Analysts reported that the Price Target for Facebook Inc. might touch a high of $185 while the Average Price Target and Low price Target is $156.84 and $80 respectively.
This year, Facebook has been in the news more often than not due of its record-shattering Second Quarter filings, Virtual Reality introduction, Facebook Workplace and now, it’s food-delivery feature from the app itself. With Facebook making various amendments this year, a great boost in the upcoming 3rd Quarter wouldn’t be wrong to predict. A good reason to invest in Facebook now is because the company’s strength can be seen in multiple areas, such as sturdy revenue growth, great financial position with reasonable debt and liability, impressive EPS growth, and expanding profit margins.
With Facebook introducing various technological advances and trying to take the game a step further, the big question that we all wonder is “Does it face any competition at all?”. Facebook will release their reports on Wednesday and to be fair, it wouldn’t be shocking to predict that they are going to shatter the analysts’ estimates and present record numbers for the upcoming quarter. With the billionaire philanthropist Mr. Zuckerberg making over $1.6 billion on average over a week, there barely seems to be a doubt if Facebook should be even debated upon while investing.