Facebook shares have ended higher for three straight sessions and are poised to make it a fourth Wednesday, ahead of its earnings announcement after the US markets closing bell.
Expectations are for revenue growth of around 40%. And, if the social media giant adds some solid customer growth and ad figures to that, the stock is sure to reward investors with further gains going forward.
By mid-afternoon UK time, Facebook shares were trading 0.75% higher at $181.34.
Tech sentiment upbeat
Investor sentiment relating to the US tech sector is pretty positive right now. Amazon and Microsoft both posted stellar earnings reports Friday last week.
Google owner, Alphabet, meanwhile, has also helped out with it’s stronger than expected advertising growth. While advertising costs fell, click throughs rose across the world, but particularly in Asia.
Given Facebook’s own social media ad structure, that specific detail could bode very well for the world’s biggest social platform. However, investors should be a little cautious. Facebook’s CFO warned in the Q2 earnings report, that ad revenue growth could slow, going forward.
Other details from the earnings report will have a big bearing on investors’ valuation of the stock too. They include:
- How many new users signed up to Facebook.
- How much advertising businesses chose to do on the platform.
- Any growth in liabilities.
- And of course, it’s future outlook and assessment.
Russian ad controversy
The recent rise in Facebook shares suggests investors aren’t too concerned over the Russian ad issue.
Facebook, along with Google and Twitter, are being grilled by US congress over their involvement and knowledge of adverts placed on their platforms during the 2016 US election campaign.
It’s been unveiled that Russian-backed Facebook ads were seen by some 126 million American users ahead of the US vote. In addition, Facebook was questioned as to how it missed the fact that so many ads, being paid for in rubles, came from Russia.
Currently, investors appear to be looking ahead to the earnings release, rather than focussing on evidence about a past event.