Despite these adversities, analysts expect Facebook to report a strong quarter with growth in revenue and earnings versus the prior-year period. The fourth quarter is likely to benefit from strong advertising revenues helped by the holiday season.
During 2018, Facebook’s user growth had stagnated, especially in the thick of the data privacy controversies. CEO Mark Zuckerberg had hinted that Facebook was reaching a saturation point in developed markets. However, the declines in the US, Canada and Europe regions are being somewhat offset by user growth in regions like Asia-Pacific.
Facebook (FB) posts slow revenue growth, but stock climbs on Q3 earnings beat
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Analysts believe that despite the controversies, Facebook’s popularity has not seen much of a dent. Although Facebook does not give specific metrics for its Instagram and WhatsApp divisions, both continue to grow at a rapid pace. Analysts estimate Facebook’s user count in the US and Canada to see a slight increase in the fourth quarter.
The issues related to data security and privacy, along with the new GDPR regulations, have led Facebook to take several measures to improve its security features, which has led to higher spending. Although these higher expenses were projected to take a toll on profits, analysts feel the impact might be lower than expected this quarter.
Facebook’s forecasts for revenue growth in the near future is a key point to watch out for. Analysts are, in general, bullish on Facebook and have given the stock a Buy rating. The average price target is $185, which reflects an upside of 24% from Friday’s closing price of $149.01.