$FB Earnings Preview

November 2, 2016 Wolf

FB is set to report Earnings tonight after the close. Expectations for Facebook remain quite high.

FB is up 19% from the post-Brexit low on June 27 and up 4.6% since its second quarter report on July 27.
- FB is sitting right on top of its 50-day simple moving average (128.63), so technical traders will be watching to see if FB can hold that line of technical support after its report

FB Weekly Chart

Key Metrics

Daily active users (DAUs)- Expectations are for 3 DAUs to be approx 1.16 bln which would represent approx 15% growth. Q2 DAUs were 1.13 billion on average for June 2016, an increase of 17% y/y; Q1 +16%, Q4 +17%;
- Mobile DAUs- Mobile DAUs were 1.03 billion on average for June 2016, an increase of 22% y/y; Q1 was +24%, Q4 was +25%; 3Q16 was 894 mln so the co needs to hit approx 1.09 bln to keep that 22% growth rate.
Monthly active users (MAUs)- Expectations are for this to be approx 1.76 bln which would represent growth of approx 13%; MAUs were 1.71 billion, better than expected, as of June 30, 2016, an increase of 15% y/y
- Mobile MAUs were 1.57 billion as of June 30, 2016, an increase of 20% year-over-year; Q1 and Q4 was 21% so FB needs to come in at around 1.67 bln in order to keep the growth rates in the 20% range.

Ad spending drives Facebook's top line, accounting for 97% of the company's revenue in the second quarter. Facebook, therefore, is watched closely as a barometer for how advertisers are spending and where they are allocating their advertising budgets.
- Mobile advertising represented approximately 84% of advertising revenue
- Facebook has a large international presence with 86% of its monthly active users at the end of 2015 residing outside the U.S. and Canada and 50% of its total 2015 revenue derived outside the U.S. and Canada. Facebook, then, will have some revealing insight to share on global user activity and the impact of foreign currency on its operating results.

FB
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- Alphabet (GOOG/GOOGL

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PowerShares QQQ Trust (QQQ)
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- FB is third largest holding at 9.36% of assets