Facebook (FB) will report its third-quarter earnings on Wednesday. Analysts’ consensus calls for Facebook to report an EPS of $1.86 on revenues of $17.4 billion for the quarter. The consensus revenue estimate expects that Facebook grew revenues 27% year-over-year in the third quarter.
Will Facebook’s earnings results be mixed?
For the last three years, Facebook has delivered a mixed bag of third-quarter results relative to the consensus. In the third quarter of 2018, the company posted an EPS of $1.76, which beat the consensus estimate at $1.47. However, revenues of $13.7 billion fell short of the consensus estimate at $13.8 billion.
In the third quarter of 2017, Facebook’s EPS and revenue metrics beat the consensus estimates. The EPS was $1.59 compared to the consensus estimate of $1.28. The company delivered revenues of $10.3 billion compared to the consensus estimate of $9.8 billion.
In the third quarter of 2016, Facebook’s EPS and revenue numbers beat the consensus estimate. The company reported an EPS of $1.09, which beat the consensus estimate at $0.97. The revenues were more than $7.0 billion, which beat the consensus estimate at $6.9 billion.
Stock could make big swings
So far, Facebook stock has risen more than 43% in 2019 as of October 25. The stock is one of the best performing FAANG stocks this year. Facebook stock usually makes big moves after the company reports its earnings.
While strong earnings numbers generally move Facebook stock, management’s comments about expected challenges or opportunities overshadow the quality of the results and weigh on the stock.
For example, the stock fell nearly 2% even after its second-quarter earnings beat the consensus estimates. The stock fell despite strong results. Facebook revealed that its deal with the FTC would cost more than $5.0 billion. The company agreed to pay the amount to settle with the agency. Facebook warned that its costs would rise due to the FTC settlement. Read FTC Antitrust Probe: More Pain for Facebook? to learn more. The warning drove some investors to sell Facebook stock despite the company’s strong earnings results.
In the third quarter, Facebook will report its earnings amid broad antitrust scrutiny. The company faces antitrust investigations from congressional, federal, and state entities. We think that the earnings numbers and management’s comments on the investigations might impact on the stock.