Facebook near an all-time high ahead of earnings

Facebook (FB.US), the world’s dominant social media platform will report earnings today after markets close. Analysts are expecting robust growth in earnings per share (EPS) as revenue is forecast to rise at its fastest pace in at least four years. 

Facebook is expected to report quarterly earnings of $3.04 per share in its upcoming report, which represents a year-over-year change of almost 70.0% (previous $1.80 per share). Revenues are expected to be $27.89 billion, nearly 50.0% higher compared to the year-ago quarter (previous 18.7 billion).

Investors will also focus on monthly active users (MAUs), a key metric that measures the size of the company's user base. This is important, because Facebook derives the majority of its revenue through selling advertising space on its social media sites and apps to marketers. Number of daily active users is expected to increase to 2.9 billion from 2.85 billion at the end of Q1 2021. If the results are in line with market expectations, then it will mean the slowest pace of new user growth in at least four years. It is worth noting that Facebook also owns Instagram and WhatsApp, both major platforms with a large number of users. Essentially, this means that a company can reach half of the world's population with its online ads, which could have a significant impact on sales and profits. On the other hand, monthly active user growth may fall due to the re-opening of the  economies around the world in the last quarter.

Besides figures, market reaction will also depend on what the company’s executives say on the conference call with analysts, especially regarding ongoing regulatory threats, allegations of antitrust and misinformation from US government and implications of Apple new ad-tracking limits.

 Facebook (FB.US) stock has been trading in an upward channel recently and is currently hovering near all-time high. If the quarterly results turn out to be much better than expected, then the upward move may accelerate towards the upper limit of the channel. However, unexpected slowdown in user growth would be an obstacle and price may test support at $358.00. Source: xStation5