Facebook Earnings In Focus

Shares of Facebook gained 54% in 2019 as the company seemed to be immune to the controversy surrounding data privacy and potential regulatory backlash. Now as we head into 2020 investors are wondering if Facebook can repeat its performance by continuing to grow its user base and its top line.

It won’t be long until investors get to hear how the final quarter of 2019 treated Facebook, as the company is set to release its fourth quarter financial results on Wednesday January 29. There are three areas that will garner special attention from investors.

The first is revenue growth. Facebook management warned of headwinds to revenue growth at the start of 2019, yet revenue growth actually accelerated, going from 26% in the first quarter to 28% in the second quarter, and 29% in the third quarter. Yet management continues to project slowing revenue, and analysts agree with an average expectation of 23.3% growth.

The second is user growth. 2019 was a good year for that too, with Facebook adding roughly 200 million users to its family of apps and bringing its total to 2.2 billion users. More growth in this area is always applauded.

The final area to keep an eye on is guidance from management. Most recently management has called for expenses in 2020 to increase substantially, projecting $54 to $59 billion in spending versus previous estimates of $46 to $48 billion. That uptick is due to increased hiring and marketing costs.

Overall Facebook looks in a good position to beat expectations when it reports for the fourth quarter.