Wall St to scour Facebook results for user defections after scandal
Facebook is on tap to report first-quarter results and Wall Street will scour the numbers for any signs of user losses or a drop-off in advertiser spending.
Shares have tumbled 10pc this year, with much of the decline related to revelations in March that it failed to safeguard the data of millions of users. Political-consulting firm Cambridge Analytica obtained information on as many as 87 million users in 2014 and then lied about deleting the data, Facebook has said. CEO Mark Zuckerberg has spoken about its efforts to improve privacy protection to users, journalists and politicians. Now he'll need to address Wall Street.
Here's a look at some of the numbers investors will study most closely:
Zuckerberg has said the company has seen no meaningful impact from a social-media hashtag campaign aimed at encouraging users to delete their accounts. It is projected to report daily active users of 1.45 billion, the average of analyst estimates, compared with 1.4 billion in the fourth quarter. Monthly active users probably rose to 2.19 billion - from 2.13 billion.
Facebook suffered its first-ever decline in North American users and said that time spent on its social network declined 5pc in the December quarter. Investors will be on the lookout for whether the trends continued in the first three months. Facebook attributed the drop to changes in how it surfaces information in the News Feed. The question for analysts will be whether the declines are truly Facebook's own design or a reflection of user preference.
Another concern is whether companies will look to promote their brands and products elsewhere. COO Sheryl Sandberg told Bloomberg News earlier this month that "a few" advertisers had paused spending. Even so, analysts are forecasting a 42pc increase in sales, to $11.4bn. Heather Bellini, of Goldman Sachs, said she expects "little to no impact" on advertising spending. Net income likely increased to $1.38 a share.
Facebook has also come under fire for its failure to staunch the spread of hate speech and false or misleading news. It has said it will ramp up spending on monitoring staff. Costs related to increased staffing threaten to crimp profit margins. Analysts at MKM said: "We think that commentary to appease regulators and users is a higher priority for management than near-term comfort to investors."
Facebook is boosting spending - aside from its efforts to regain the public's trust it is shelling out for content deals for its new video section, Facebook Watch, and investing in R&D in artificial intelligence and its hardware businesses.