How to Prepare for Facebook's First Earnings Report

The Atlantic
How to Prepare for Facebook's First Earnings Report

View photo

How to Prepare for Facebook's First Earnings Report

This afternoon at 4 p.m. Facebook will report its first earnings report since it went public in May, giving us all sorts of information, like financials goodies, that it's never had to divulge before. It's like Facebook's first test as a big-kid company. And as both the biggest and the most disappointing IPO of the year, the cold hard facts about the state of the company will let us know how to feel about a company whose future has been hotly debated by observers. So, here's everything you need to know about Facebook's first ever earnings report before its first ever earnings report.  

RELATED: Pinterest's Scary Big $1.5 Billion Valuation

First, the numbers. What is the mark Facebook is trying to hit to make analysts happy? 

RELATED: Silicon Valley Sure Is Spending Like There's a Bubble

The official number analysts expect to see out of Facebook is 12 cents per share on a revenue of $1.14 billion for the quarter, according to a poll by FactSet, reports The Associated Press. That compares to the $3.71 billion in revenue all of last year. Analysts have also reached a consensus on what Business Insider's Nicholas Carlson says is an "utterly miserable" 19 percent ad revenue growth, suggesting that Facebook is low-balling Wall Street on purpose to make its reported number look better. "If Facebook only 'beats its estimates' by a little, you'll know that the company's business has deteriorated since the IPO," he writes. 

RELATED: Mark Zuckerberg Promises Not to Bail on Facebook for the Next Year

That is just an average of all the guesses, though. Individual analysts have made estimates in a wider range than usual for a big earnings call, The Wall Street Journal's Alexandra Scaggs wrote. "Analysts are guessing the company will report earnings anywhere from nine cents to 29 cents a share, a 222 percent jump from the smaller end of the range to the larger," she writes. But none of these guesses really, really matter, because as Scaggs explains, analysts are particularly bad at getting the first earnings ever right. "Estimates for a company's initial report after publicly listing its stock were 54 percent off, on average, from the actual results, according to a review of Dealogic and FactSet figures," she writes.

RELATED: Facebook Has Officially Popped the Start-Up Bubble

OK, is there anything besides revenue and ad revenue to look out for?

RELATED: Is the Tech IPO Back, or Just Back for Some?

Ad revenue is particularly important for Facebook, which has gotten itself many skeptics since going public. But, the company will also mention user engagement numbers, another just as important metric. Facebook will either confirm or deny that it has lost some popularity in the U.S. and other markets. Since Facebook sells people, it needs to keep those people coming to make money. The other fun thing will be its mobile share. That's the up and coming thing that Facebook is trying to conquer. 

Once Facebook gives the results, how will we know if it's good or bad?

After-hours trading of Facebook's stock will be the most widely cited measure of how investors feel about the results. The social network's share price sank quickly from its $38 IPO price, but it has bounced around the $30 mark since then. But after Zynga, the game-maker whose business relies heavily on Facebook, announced poor quarterly earnings last night, Facebook has drooped down to about $27 today. Keep an eye on Zynga's stock price, too, since it might fall further (it's already off since dropped 40 percent today) if Facebook disappoints as well. 

So, who is going to tell us all of this news?

Maybe Facebook CEO Mark Zuckerberg himself, maybe not. Considering the disdain Wall Street had for the hoodie wearing leader during the roadshow and vice versa, he might not present the results. Facebook gave no comment on the matter when AllThingsD's Mike Isaac inquired. "It is possible — though not probable, I’d bet — that he’ll pull a no-show the first time around," writes Issac. Though, he thinks Zuck will make an appearance then leave the rest to his business arms Chief Operating Officer Sheryl Sandberg and Chief Financial Officer David Ebersman.

What if I miss something? Or if Facebook makes an announcement not covered in this post?

Not to worry, we'll have a breakdown of the results when the call starts this afternoon at 4 p.m.. 

View Comments (1)

Recommended for You

  • US billionaire says WWII Japanese ship found in Philippines

    Microsoft co-founder Paul Allen said Wednesday he had found one of Japan's biggest and most famous battleships on a Philippine seabed, some 70 years after American forces sank it during World War II. Excited historians likened the discovery, if verified, to finding the Titanic, as they hailed the…

  • NATO flotilla enters Black Sea for training amid Ukraine crisis

    A NATO flotilla arrived in the Black Sea on Wednesday to train with ships from the Bulgarian, Romanian and Turkish navies, the U.S.-led Western alliance said. Tensions in the Black Sea region are running high because of the separatist conflict in eastern Ukraine and Russia's annexation of the…

  • U.S. may review 1959 airplane crash that killed Buddy Holly

    (Reuters) - U.S. transportation safety investigators said on Wednesday they are reviewing a request to reopen a probe into the 1959 airplane crash that killed musicians Buddy Holly, Ritchie Valens, J.P. Richardson, better known as "The Big Bopper," and their pilot. The original investigation 56…

  • 175-Pound Pit Bull Hulk Shatters Misconceptions About the Breed

    This dog just may be the world's largest Pit Bull. Only 18-months-old, Hulk weighs a hefty 175 pounds. He's also best friends with a 3-year-old boy.

    ABC News
  • Former marine reported killed in Syria

    A former Royal Marine has become the first Briton to be killed while fighting with Kurdish forces battling Islamic State jihadists in Syria, leaving his family "devastated" Wednesday. Konstandinos Erik Scurfield, 25, died on Monday in a battle with IS militants, a source in the Kurdish People's…

  • Australians on Indonesia death row arrive on execution island

    Two Australian drug smugglers were taken Wednesday to an Indonesian island where they will be executed despite frantic diplomatic efforts to save them, as Prime Minister Tony Abbott said Australia was "revolted" by their looming deaths. Andrew Chan and Myuran Sukumaran, the ringleaders of the…

  • Killers sought in deaths of 300,000 chickens in South Carolina

    By Harriet McLeod CHARLESTON, S.C. (Reuters) - Revenge may be the motive for the killings in South Carolina of more than 300,000 commercial chickens worth about $1.7 million over the past two weeks, authorities said on Monday. Birds have been found dead of unnatural causes in 16 chicken houses at…

  • Marijuana Growers Arrested After Pocket Dialing 911

    Three men in California were arrested Monday night after one of the suspects pocket dialed 911. The emergency operator who took the call heard two of the men talking about the possibility of getting pulled over, leading to a major drug bust.

    KSWB - San Diego
  • Iranian president says Israel 'greatest danger'

    Iranian President Hassan Rouhani on Wednesday said Israel creates the "greatest danger" in the region, after Israeli Prime Minister Benjamin Netanyahu warned against a nuclear deal with the Islamic republic. In a speech on Capitol Hill, Netanyahu said Tuesday the nuclear agreement US President…

  • 'Thousands' of Russian troops in east Ukraine: US envoy

    The United States' senior envoy to Europe alleged Wednesday that Russia had deployed "thousands and thousands" of troops to neighboring Ukraine. Speaking to a congressional foreign affairs committee, Assistant Secretary of State Victoria Nuland also told US lawmakers that Russia was flooding…

  • View

    Hello kitty and kitty and lots more kitties on Japanese island where cats rule (17 photos)

    An army of feral cats rules a remote island in southern Japan, curling up in abandoned houses or strutting about in a fishing village that is overrun with felines outnumbering humans six to one. Originally introduced to the mile-long island of Aoshima to deal with mice that plagued fishermen's…

    Yahoo News
  • Mom convicted of killing son, 5, by poisoning him with salt

    WHITE PLAINS, N.Y. (AP) — A woman who blogged for years about her son's constant health woes was convicted Monday of poisoning him to death by force-feeding heavy concentrations of sodium through his stomach tube.

    Associated Press
  • Survivor testifies about 2 friends stabbed, bound, drowned

    PHILADELPHIA (AP) — A man who survived being beaten, bound, stabbed in the neck and kicked into the Schuylkill River took the stand in a hearing Tuesday and described the night his two friends lost their lives.

    Associated Press
  • Afghan forces kill dozens of militants in hostage rescue operation

    By Sarwar Amani KANDAHAR (Reuters) - Afghan security forces have killed dozens of militants in a military operation aimed at freeing a group of civilian hostages in southern Afghanistan, an army official said on Wednesday. Eyewitnesses said most passengers belonged to the ethnic Hazara minority, a…

  • Americans Love K-Cups, but Their Creator Regrets Inventing Them

    Now it seems that John Sylvan, the inventor of the tiny containers, is firmly on Team #KillTheKCup too. “No matter what they say about recycling, those things will never be recyclable,” said Sylvan.
  • Paris Hilton brother Conrad to plead guilty to plane assault

    LOS ANGELES (AP) — Paris Hilton's youngest brother, Conrad, agreed to plead guilty to assaulting flight attendants on a trip from London to Los Angeles last year when authorities say he called other passengers "peasants" and threatened to kill crew members.

    Associated Press
  • Georgia police officer killed in shootout

    By David Beasley ATLANTA (Reuters) - A Georgia police officer was killed in a shootout with a suspect in suburban Atlanta early on Wednesday, authorities said. Officers went to investigate reports of shots in a suburban neighborhood and came under fire about 1:30 a.m. EST, according to the Fulton…

  • Father says no proof his son is 'Jihadi John'

    The father of "Jihadi John" said in an interview published Wednesday that there was no proof that his son was the Islamic State executioner, adding there were a number of "false rumours" circulating. "There is nothing that proves what is being circulated in the media, especially through video clips…