Facebook Share Price Attempting To Rebound Ahead Of Q3 Earnings

Facebook Earnings - What To Expect

For the upcoming earnings release, the impact of Apple’s anti-tracking initiative on Facebook’s (FB) businesses will be closely assessed, as the management has previously cautioned of a larger impact of the iOS updates in Q3, compared to the previous quarter. To recall, Apple has previously implemented new privacy controls, which limit digital advertisers from tracking iPhone users for advertising purposes without their consent.

space gray iPhone 6 with Facebook log-in display near Social Media scrabble tiles

Image Source: Unsplash

While the dropout rate to allow data collection remains to be seen, the upcoming Q3 results may provide some clarity on the impact to Facebook ad effectiveness and switching from advertisers. Some resilience in the figures for average price per ad and number of ads delivered may aid to ease some concerns in that regard.

The upcoming earnings into 2H 2021 may also reveal a lower base effect compared to a year ago, where Facebook saw a huge boost in sales in 3Q and 4Q 2020 from a strong recovery in business advertising spends. Sales and earnings growth may continue to normalise in the quarters ahead and the management’s outlook will be looked upon for guidance.

Facebook Share Price Attempting to Rebound Ahead of Q3 Earnings

Source: Facebook

Facebook has also been weighed by recent negative news flow, coming from a whistle-blower on the harmful effects of Instagram for young users. The management may need to address these concerns and while debates around the issue may drag on towards year-end, subsequent platform and businesses’ processes adjustments by Facebook may ease such concerns in time to come. This may be reflected in previous instances of data breaches, where markets look past these near-term ‘noises’ and daily active users for Facebook’s ‘family’ of products continue to grow.

A risk for Facebook share price, however, may be movement in the US 10-year Treasury yield. With 10-year yield having broken out of its period of consolidation since late September, further upside may be a likely scenario, which could keep valuation multiples of high-growth companies in check.

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