What to Expect When Facebook Inc Reports Earnings Tomorrow

Facebook will report first-quarter earnings after the bell on Wednesday. Here's what investors should expect.

Apr 22, 2014 at 12:45PM

Facebook (NASDAQ:FB) is set to report its fiscal 2014 first-quarter earnings after the market close tomorrow. Investors who stuck with this stock from the beginning have locked in some serious profits. Shares of the social media giant have recovered nicely from its botched initial public offering -- up 60% from its IPO price of $38 per share. They currently trade at around $61 a pop. However, Facebook will need to deliver a strong first quarter if it wants this momentum to continue.


Source: The Motley Fool.

Conversation starters
Facebook has been on an acquisition spree lately, spending more than $20 billion to scoop up companies from Instagram to virtual reality upstart Oculus VR among others. Since the start of 2014, in fact, Facebook has spent $19 billion for social messaging app WhatsApp, and $2 billion for Oculus RV. 

Shareholders should look for more color on how Facebook plans to integrate these multibillion-dollar investments into its growth strategy going forward. The company has slowly begun introducing advertisements on its stand-alone Instagram platform. These in-stream ads have worked well in Facebook's News Feed, which is one of the reasons major brands have now taken to Instagram.

Yum! Brands (NYSE:YUM), which owns Taco Bell, was the first company to buy targeted ad space on the photo-sharing application. Last month, the fast-food joint ran its "Wake Up. Live Mas." campaign on Instagram to kick off its product launch for breakfast waffle tacos. Yum! Brands is also running similar ads on other media platforms including Facebook, Vine, and Pandora.

With more than 200 million active monthly users today, Facebook-owned Instagram should be able to grab other big advertising contracts in the future. Omnicom bought nearly $40 million in Instagram ad inventory recently, according to Adweek. And we should see more media buy where that came from as other big brand names begin to look to the photo sharing site.

Growing mobile ad revenue
For Facebook, this means investors can expect even stronger revenue growth from mobile advertising down the road. Its mobile ad business comprised 53% of its total ad revenue for the fiscal 2013 fourth quarter, up from just 23% during the same period a year earlier. This figure gets even bigger once we throw Instagram's mobile ad revenue into the mix.

While Instagram's contributions won't show up in Facebook's first-quarter results, the company should give us a better indication of what to expect in the quarters to follow. Furthermore, if Facebook sees strong demand for ads on Instagram's platform, investors would likely see it follow a similar path with its WhatsApp acquisition.

In short, investors can expect Facebook to give more color on how it plans to integrate its recent purchases into its core business when the company reports tomorrow. Shareholders should also get more insight into its growing mobile ad business. As it stands, analysts expect first-quarter earnings of $0.24 per share, on revenue of $2.35 billion in the period.

More from The Motley Fool
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Tamara Rutter has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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