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Facebook Q3 Earnings: What To Expect?

As privacy concerns simmer, will Facebook join the trillion-dollar club or will it take a nosedive with other advertising stocks?

Facebook (NASDAQ: FB) has big plans with its new name announcement and focusing on the metaverse. But is this an innovation push or is it worried about the long-term viability of its ad business? Investors are concerned that Facebook may miss expectations following Snapchat’s earnings release yesterday, which led to more than a 20% drop in its share price after hours. This worry is spreading to all advertisers and comes from Apple’s iOS 14.5 Update.

What’s iOS 14.5 and why does it matter? 

It’s Apple’s new update. It puts a focus on user privacy and forces a push notification to ask if they can track your activity across apps and the web. Unsurprisingly, most are opting out — 96% according to some sources. Statistics show that over half of all web traffic comes from mobile devices, and that’s excluding tablets. Mobile advertising campaigns are losing data they had been using to acquire and retarget customers so ad revenues could take a huge hit. 

Where can I listen to the earnings call?

Right here. Facebook will announce results at 5 PM ET, right after the market closes on Monday. You can listen to the full webcast on the investor relations page with the link above.

And what are we looking out for?

Revenue revenue revenue. We want to see the total ad spend that is coming in, and the spend per user has changed. Facebook’s commentary on forward guidance and how they intend to tackle the iOS 14.5 issue will be vital to reinforcing positive sentiment in investors. 

Will it affect revenue?

Likely, yes. Facebook shares fell 4% pre-market off of Snapchat earnings on 22 October. Unlike boycotts in the past over data mismanagement, political scandal, or other temporary events, this could be a more permanent loss to ad revenue. Businesses will be rethinking strategies to take an omnichannel approach to ad spend and platform focus, as well as spinning off more organic marketing strategies and search engine optimization (SEO) rather than paid advertising.

BrightEdge says SEO drives 1,000% more traffic than organic marketing, so we could see a major change in advertising as a whole. 

So what’s the verdict?

While this may have an adverse effect on Facebook, it has faced challenges in the past and has overcome them each time. It is one of the great innovators of the last 15 years, and like him or not, Mark Zuckerberg is a fantastic CEO. I believe in Facebook in the long term, and although the short-term looks iffy, I can see it continuing to grow well into the future.

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