Stock Preview: Facebook (NASDAQ FB) Q3 Earnings Preview

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Facebook Inc (NASDAQ FB) is scheduled to report its third-quarter financial results for the fiscal 2014 after the market close on Tuesday, October 28. Facebook’s ad load and user growth became less relevant drivers in North America and Western Europe, according to Bernstein Research analysts.

Analysts at Bernstein Research believed that investors will focus their attention on the most important issue—the evolution of like-per-like pricing of Facebook, Inc (NASDAQ FB). In addition, investors are also expected to watch the Instagram monetization closely, as well as its mobile ad network.

Bernstein Research analysts Carlos Kirjner and Peter Paskhaver estimated that Facebook Inc (NASDAQ FB) will post non-GAAP earnings of $0.41 per share and $3.089 billion on revenue compared with the consensus estimate of $0.40 per share and $3.106 billion in revenue.

The analysts emphasized that their estimates for Facebook Inc (NASDAQ FB) are “inline or slightly above the consensus for the current quarter, but below consensus further out.”

Facebook Inc: Q3 Earnings Preview

Kirjner and Paskhaver expressed uncertainty regarding the price increase on a like-peer-like basis if it is enough to beat expectations in terms of revenue. They emphasized that the ad load and user growth become less relevant drivers in North America and Western Europe.

Facebook Inc (NASDAQ FB) generates majority of its ad revenue in North America and Westen Europe. The analysts expected that the search engine giant’s user growth in both regions will be 0% over the next several quarters. During the previous quarter, Facebook’s users grow by 3% in Canada and the United States and only 1% in Europe.

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Facebook Inc (NASDAQ FB) Business News

The analysts suggested that it would be more difficult for Facebook Inc (NASDAQ FB) to sustain its current revenue growth rate in 2015 (based solely on the increase if Newsfeed revenues in mobile).

Kirjner and Paskhaver believed that the user’s engagement in North America and Western Europe will be lesser given the very high smartphone penetration in the United States and soon to be very high in Western Europe.

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