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Facebook Earnings Preview: TikTok, WhatsApp, and Libra Issues Linger


Nov. 20 2020, Updated 3:26 p.m. ET

Facebook (NASDAQ:FB) will report its fourth-quarter earnings on Wednesday after the market close. Notably, Facebook will become the third company in the FAANG group to report financial results for the quarter ending in December 2019. Netflix (NASDAQ:NFLX) reported its earnings on January 21. Apple will report its earnings today after the market close. Amazon (NASDAQ:AMZN) and Google parent Alphabet (NASDAQ:GOOGL) will report their earnings on January 30 and February 3, respectively.

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What to expect from Facebook’s earnings

Wall Street expects Facebook to report an EPS of $2.53 on revenue of $20.9 billion for the fourth quarter. In the fourth quarter of 2018, Facebook posted an EPS of $2.38, which beat the consensus estimate at $2.18. The revenue was $16.9 billion, which easily beat the consensus estimate at $16.4 billion.

Currently, Facebook faces a lot of lingering issues. Investors will watch Facebook’s earnings report closely.

Combating TikTok’s threat

A lot has happened in the competition between Facebook and TikTok since the last earnings report in October. Recently, Sensor Tower released a report that showed TikTok beat all but one Facebook app in downloads. TikTok’s rapid rise threatens one of Facebook’s star apps—Instagram. According to eMarketer estimates, Instagram generated $9.5 billion in ad revenue in 2019. Instagram’s ad sales could hit $13.9 billion in 2020. While Instagram is one of Facebook’s top money-making apps, it’s also the most vulnerable to TikTok’s rise.

TikTok continues to give Facebook tough competition for social apps users. The company has also poached Facebook’s staff and advertisers. Investors will be looking for updates on Facebook’s efforts to counter TikTok’s threat.

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WhatsApp monetization

Facebook was going to step up WhatsApp monetization efforts this year by bringing ads to the platform. However, the company changed its mind. Facebook doesn’t plan to open WhatsApp for advertisers. When Facebook reports its earnings, investors will be looking for management’s commentary about WhatsApp’s monetization roadmap. WhatsApp has a larger audience than Twitter (NYSE:TWTR), which generates billions of dollars in ad sales annually.

Libra’s uncertain future

Facebook’s earnings report is set to arrive following a major setback for its Libra cryptocurrency project. Last week, Libra lost one of its biggest corporate backers. Vodafone left the project. Vodafone’s withdrawal throws Libra’s future into doubt following PayPal, Visa, and other early departures.

The continued exit of Libra’s big backers comes amid challenges to secure regulatory approval for digital currency projects. Facebook had a lot of hope for Libra. Investors will be looking for updates on how the company plans to move forward amid the recent setbacks.


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