Our earnings spotlight shines on Facebook which is scheduled to report first-quarter earnings after US markets close on Wednesday.

Despite regulatory pressure and lingering anti-trust threats, the social-media juggernaut is expected to report another stunning quarterly result this evening.

Such an outcome may boost confidence over the business outlook and possibly elevate Facebook shares which are up over 11% year-to-date. 

Given the optimism over a global economic recovery and countries across the world easing lockdown restrictions, the Q1 earnings will certainly be one of Facebook’s most significant in years.

Market expectations: EPS & Earnings

According to Bloomberg, adjusted earnings per share (EPS) stand around $2.61 per share on $23.72 billion in revenues for Q1 2021.

For a full year, EPS are projected at $12.80 while full-year revenues are seen hitting roughly $108.11 billion – marking a 25.8% increase from 2020.

Interestingly, monthly active users are forecast to hit 2.83 billion which is roughly 36% of the world population. Investor sentiment towards Facebook may brighten if the revenues and EPS meet or exceed forecasts.

What to expect?

The hot topic is privacy. Apple plans to change to its iOS 14 software which forces iPhone users to approve Facebook collecting their data.

If Facebook users on iPhone reject, this could hit revenues going forward. But the question is by how much? Investors are likely to turn to the earnings release which may shed more light on this along with management opinions on what Apple’s latest move means for the business outlook.

As the global economic outlook continues to brighten, Facebook remains one of the winners.

It must be kept in mind that small businesses will most likely benefit from the economy re-opening and normality returning. Given how Facebook gets a handsome chunk of its revenues from these small businesses, the business outlook remains encouraging and this may be reflected in the earnings report.

Can Facebook retest all-time highs?

Facebook shares are looking slightly bearish on the daily charts as there have been consistently lower lows and lower highs since hitting the all-time high of $315.73 on 8th April.

Although prices are respecting a bearish channel and trading marginally below the 20 SMA, support can be found at $296.00. Should $296.00 prove to be reliable support, a rebound back towards $310 and $315.73 could be on the cards. Alternatively, a breakdown towards $296 may open the doors towards $290.50.

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