Big Tech Earnings Week: What To Expect Of Facebook

Facebook will be one of the first FAAMG names to report holiday quarter results. Will the company’s performance exceed expectations and help to turn investor sentiment around?
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Earnings week for Big Tech is upon us.

The Apple Maven has started to look at the most important earnings events of the next few days. Here is the schedule for the five most valuable publicly traded companies in the US:

Today, the Apple Maven takes a look at a company and stock that have been hurting from the backlash caused by the events of early January in Washington-DC. Facebook, no longer one of the top 5 most valuable names in the US, reports earnings on January 27.

What Wall Street Says

On average, analysts expect Facebook’s earnings per share to land at $3.19, which would represent respectable bottom-line growth of 25%. Revenues are projected to increase very much at the same pace.

What the Apple Maven says

All eyes will likely be on Facebook’s active users at first.

Daily usage in developed countries (i.e. US, Canada and Europe) has turned lower sequentially for the first time ever last quarter. It will be interesting to see if the trend reverses, as stay-at-home habits continued through the last quarter of 2020.

Another important topic of conversation will be operating expenses. For the past couple of years, Facebook has invested in security and moderation, which has trimmed the company’s op margins to less than 40% in the past three quarters.

Of all FAAMG companies, Facebook seems to have its bar set at the lowest by investors. The graph below shows that EV-to-EBITDA, a key valuation metric, has been slashed by nearly two-thirds from the 2013 peak, to only 20 times today.

Because Facebook trades at fairly low multiples, it may be easier for a hypothetical earnings beat to trigger bullishness on Facebook’s earnings day. Time will tell.

Facebook EBITDA

Facebook EBITDA

Source: Stock Rover

Twitter speaks

I have posted a Twitter poll in which I ask: which Big Tech stock will come out of earnings week the strongest? What do you think? To vote for Facebook, click “other”.

The Apple Maven on Twitter: 

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The graph used in this report was provided by Stock Rover. I have been impressed with the breadth and depth of information on markets, stocks and ETFs that this platform provides. Stock Rover also helps to set up detailed filters, track custom portfolios and measure their performance relative to a number of benchmarks.

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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)