Facebook's Q4 Earnings Report: A Primer

Facebook Inc (NASDAQ: FB) is scheduled to report Q4 earnings on February 1. The company could beat the revenue, adjusted EBITDA and non-GAAP EPS estimates, Loop Capital Markets’ Blake Harper said in a report. He maintains a Buy rating on Facebook, with a price target of $165.

Harper believes Facebook could report its revenue, adjusted EBITDA and non-GAAP EPS figures ahead of his estimates of $8.3 billion (42 percent year-over-year growth), $5.2 billion (34 percent year-over-year growth) and $1.23 (56 percent year-over-year growth), respectively, which are marginally below the current consensus expectations.

2017 Could Be An Investment Year

“Based on our feedback from advertisers and agencies, we expect them to remain committed to spending on Facebook, but there is frustration with the company's issues with its reporting metrics,” Harper wrote.

While this may not bear any near-term impact on Facebook, many advertisers and agencies were exploring other ad networks and publishers beyond Facebook and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), the analyst noted. Facebook was likely to increase investments in its media partners and content, “as well as in driving more video content through its apps, especially Facebook Live.”

Instagram and Facebook’s new video ads could partially offset the overall deceleration in growth, allowing the company to meet the current consensus projections of over 34 percent revenue growth in 2017. Harper added, however, that growth in Facebook’s operating expenses could rise to 45 percent, ahead of its revenue growth.