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Facebook Inc (FB): What Might Happen If Earnings Report Misses The Street’s Estimates?

Facebook Inc (NASDAQ:FB) is all set to roll out its quarterly earnings on Tuesday. In spite of warnings from Facebook to investors during last quarter earnings report conference call, Analysts’ are highly optimistic in their estimates. A ‘CNBC’ article discusses about expectations around Facebook Inc (NASDAQ:FB)’s earnings report and analysts’ views on the stock.

Facebook Inc (FB), JetBlue Airways Corporation (JBLU)

Facebook Inc (NASDAQ:FB) reported a pretty successful second quarter results with a revenue of $1.81 billion, 53% up year-over-year. Facebook’s stock price also went up by more than 30% in the last 6 months, mainly due to these strong earnings. But the company has warned the investors during the last quarter earnings report conference call that similar top line growth might not happen during second half of the year. But some wall street estimates are very optimistic and survey conducted by a Thomson Reuters Analyst suggest that the company is expected to stack up a revenue of around $3.12 billion, 61% up year-over-year.

RBC Capital Markets Analyst, Mark Mahaney thinks that even if Facebook Inc (NASDAQ:FB) misses the estimates, the company has many other revenue generation streams, which will be functional in the coming months.

“Even if they miss the expectations on Tuesday night, you have got these upcoming catalysts, new revenue streams like autoplay video ads, Instagram monetization. People are going to want to buy the stock before we start seeing that roll out and it’s rolling out in the next three to six months,” Mahaney was quoted as saying.

Mahaney feels that miss in the earnings report coupled with the availability of more than 170 million shares, due to the lockup period expiration for stock sold during Whatsapp acquisition might spur the stock selling. Mahaney is estimating a year-over-year Monthly Average Users (MAU) growth of 13% to 1.34 billion users for Facebook Inc (NASDAQ:FB) in the third quarter. He feels that company is well positioned for revenue growth in advertisements as well.

Pivotal research Analyst, Brian Wieser estimated that Facebook Inc (NASDAQ:FB) will have 10% of overall advertising space in US in 2014 and 12.5% in 2015. The company is expected to be on track to meet that estimate with strong 67% growth year-over-year in ad revenues in second quarter. Facebook is expected to announce some similar growth in third quarter as well. Facebook’s ad revenues are mainly due to its strong hold in mobile advertising market.

Bitly CEO, Mark Josephson feels that it is unlikely for Facebook Inc (NASDAQ:FB) to report lower growth in mobile ad sector. He pointed out that his company tracks more than 8 billion clicks every month and they understand the interaction between social media and consumer better than anyone else.

“The Bitly data is really interesting for the third quarter over the second quarter. The first thing is the continued dominance of Facebook. […]It’s incredible how fast they have been accelerating their growth and grabbing share in overall click volume,” Josephson was quoted as saying.

Disclosure: None

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