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It sounds like a broken record, but Facebook Inc.’s results continue to do just that: break records.
Expect more of the same Wednesday, when the social-networking giant announces third-quarter results.
KeyBanc Capital Markets analyst Andy Hargreaves certainly does. “We expect Facebook to report solid top-line growth with potential for upside to our and consensus revenue estimates,” he said in an Oct. 21 note that maintained an Overweight rating on Facebook shares with a price target of $240 — 28% above its closing price on Friday.
The more Facebook FB, +0.48% is eviscerated by politicians, regulators, privacy advocates, and consumers, the less its stock or bottom line seem to be impacted. Facebook’s stock is up 43% this year, and it is projected to haul in $17.4 billion in third-quarter sales and earnings of $1.90 a share, according to analysts polled by FactSet.
Ad sales, which accounted for nearly all of Facebook’s $55.8 billion in 2018 revenue, are projected to reach $70.3 billion this year, an increase of 26%. Monthly active users should reach 2.45 billion in the third quarter, up 8% year-over-year — no small feat. And even as Facebook’s core growth inevitably slows, its property Instagram is picking up the slack.
What is all the more remarkable is that this is happening against a backdrop of bad news and embarrassing disclosures that would sink most Fortune 500 companies. The Federal Trade Commission, which fined Facebook a record $5 billion this summer, has launched another investigation into the company’s business practices. Additionally, 47 state attorneys general are examining the company on similar grounds. To top it off, politicians from California to Washington, D.C., are calling for Facebook to be split up.
Despite a brutal quarter in the public eye, the company has managed to extend its tentacles into sports programming with ESPN, a dating app via its Instagram division, and the acquisition of CTRL-Labs, a startup that is developing software and a bracelet, which would let people control computers with their brains.
Read more: Facebook to buy startup that lets humans control computers with their brains
If there is a downside, some analysts warn, it’s the heavy investments Facebook is making for user privacy and security, which has led to weaker margins. Digital advertising, meanwhile, is unlikely to maintain its torrid pace as large and small businesses more closely scrutinize their ad budgets, GroupM analyst Brian Wieser told MarketWatch in a phone interview.
There is one other stark number that should give Facebook pause.
Americans are spending 26% less time on Facebook than they did two years ago, and they’re increasingly using more social networks as an alternative.
Facebook users spent on average 12:52 hours a month on the platform in 2017; today, that figure is down to 9:28 hours, according to a study by market researcher Active Inc. At the same time, social media users in the U.S. belong to 5.8 different social media networks; by 2023, it should be 10.
