All eyes on Facebook's user growth ahead of Q2 2019 earnings

All eyes on Facebook's user growth ahead of Q2 2019 earnings

Facebook is expect to announce is Q2 earnings on Wednesday. (Image: Chesnot/Getty Images)

FB) will announce its Q2 2019 earnings report on Wednesday, and all eyes will be on user growth. Investors are looking to put the social media giant’s myriad controversies in the rearview mirror and instead focus on its fundamentals.

Here’s what analysts are expecting based on Bloomberg-compiled estimates as of Tuesday.

  • Revenue: $16.5 billion versus $13.2 billion YOY

  • Adjusted earnings per share: $2.24 versus $1.74 YOY

  • Daily active users: 1.57 billion (Barclay’s) versus 1.47 billion YOY

Facebook’s daily active user (DAU) and monthly active user (MAU) numbers have been on a steady upward trajectory for the better part of five years, though they haven’t always met analysts’ expectations every quarter. The company doesn’t break out individual numbers for its Instagram or WhatsApp properties, but it estimates that about 2.1 billion people access at least one of its services every day.

How Instagram and WhatsApp could drive growth

While the main Facebook platform is the standout for the company, both Instagram (a photo-sharing site) and WhatsApp (a messaging app) still have room to grow and make money.

Oppenheimer analysts Jason Helfstein and Jason Hoffman point to ways that Instagram is starting to make money. For example, brands can now promote influencer-created content to users’ feeds, even if they don’t follow those influencers. Additionally, Helfstein and Hoffman say a new shopping feature on Instagram could be a boon for Facebook.

“A selling fee will be charged as IG’s in-app purchase integration creates higher consumer conversation. We see the data collected from this process as further improving FB’s ad targeting abilities,” the two wrote in their analysis.

What’s more, Helfstein and Hoffman say that Instagram should see an increase in user time spent on the app throughout the summer months.

“Instagram is positioned to be the most dominant app of the internet this summer. We single out last summer’s months as we noticed a bigger surge in IG time spent per user than other platforms with similar time and seasonality: FB and Snap.”

advertising on Instagram’s Explore tab.” data-reactid=”35″>Daniel Salmon at BMO Capital Markets is similarly high on Facebook’s decision to put advertising on Instagram’s Explore tab.

“We estimate Explore will add an incremental $0.8B and $1.6B to our 2020 and 2021 revenue estimates, respectively,” Salmon wrote in his analyst note. “We expect Instagram Explore ads to ramp quickly, as the placement is similar to the Feed and we believe more shipping behavior occurs in Explore vs. the Feed.”

Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) have called on the company to be broken up due to its massive reach and outsize influence.” data-reactid=”37″>Facebook, however, still faces a number of challenges, including serious pushback from Congress over its Libra cryptocurrency. Moreover, presidential candidates Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) have called on the company to be broken up due to its massive reach and outsize influence.

There’s also the looming call for privacy regulations from members of Congress, though that doesn’t seem likely to move forward anytime soon.

The California Consumer Privacy Act will go into effect in January 2020 and will be the strictest data privacy law in the U.S.; it could have some implications for Facebook’s business in the U.S. and abroad.” data-reactid=”39″>What will move forward is California’s upcoming privacy law. The California Consumer Privacy Act will go into effect in January 2020 and will be the strictest data privacy law in the U.S.; it could have some implications for Facebook’s business in the U.S. and abroad.

We’ll find out more when Facebook announced its earnings on Wednesday after the bell.

@DanielHowley.” data-reactid=”47″>Email Daniel Howley at dhowley@yahoofinance.com; follow him on Twitter at @DanielHowley.

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