Buy Facebook Inc (FB) On Earnings

Facebook Inc (FB)Facebook Inc (NASDAQ:FB) is currently the best-placed technology giant with the potential to dominate the Internet advertisement arena in the near future. It is the only destination on the Internet that users visit consistently for no ‘specific reason.’ Services like Google Inc (NASDAQ:GOOG)Yahoo! Inc. (NASDAQ:YHOO), YouTube, Whatsapp, and Skype are usually used for a specific purpose, while a social media website like Facebook Inc (NASDAQ:FB) becomes a part of one’s routine. The social media giant will report its quarterly earnings this week and a peek at the results of competitors reveals that Facebook can beat earnings estimates. If the company is able to beat estimates and improve mobile monetization further, the shares will rally.

Earnings Preview

Facebook Inc (NASDAQ:FB) will report its quarterly earnings this week. The key takeaway from these earnings will be the success of Facebook with its mobile monetization plan. The market expects Facebook to report earnings of $0.13 per share on revenues of $1.44 billion. As the table below shows, the company has not missed analysts’ expectations in the last three quarters and has beaten them in the last two quarters.

Earnings History Jun 12 Sep 12 Dec 12
EPS Est 0.12 0.11 0.15
EPS Actual 0.12 0.12 0.17
Difference 0.00 0.01 0.02
Surprise % 0.00% 9.10% 13.30%

Source: Yahoo Finance

Major competitors such as Google Inc (NASDAQ:GOOG) and Yahoo! Inc. (NASDAQ:YHOO) have already reported their quarterly results and these results indicate that Facebook Inc (NASDAQ:FB) will be able to beat analyst’s expectations. In the recently reported quarter Google Inc (NASDAQ:GOOG) beat earnings estimates due to better than expect CPC and paid click growth of more than 20%. Revenues from international and local markets have shrunk overall due to tough completion form Facebook in the display segments.

Yahoo! Inc. (NASDAQ:YHOO) also reported its quarterly results last week, beating EPS but missing on the top line. The company reported an 11% y/y decline in display segments, which can also be attributed to the tough competition from Facebook. These results show that while CPC have been better than expected, revenues have gone down, which could be due to growth in Facebook’s revenues. Therefore, investors should expect that the technology giant will easily beast street estimates.

Facebook advertisement tool

According to recent developments reported by The Wall Street Journal, Facebook Inc (NASDAQ:FB) is making some big moves to compete with Google’s high-quality placement. The company has recently partnered with major data players like Acxiom, Datalogix, and Alliance Data Systems. Facebook will launch a new advertisement tool that has been developed using data from these partners. This tool will combine information that the company already has and match it to different types of data gathered by these giants, things like web page visits and email lists.

The two combined data sets will make advertisement efforts more precise and relevant. Facebook Inc (NASDAQ:FB) already has information about page likes, friends, and group likes, and data brokers like Datalogix gather information about consumer purchases and buying trends. The companies don’t share personal information that can be harmful to users, like emails and phone numbers, with advertisers, but they do release information about behaviors and trends. The two combined data sets will empower advertisers to select overlapping categories that match their own target market. According to experts, the tool will have a similar affect to Google’s search-results-based marketing tactics.