Jul 25, 2018
Facebook set to wow Wall Street with boost from Instagram
Facebook Inc. is set to report its latest financial results after markets close Wednesday, and if analyst estimates are any gauge, the company will once again wow Wall Street.
According to data compiled by Bloomberg, Facebook’s second quarter revenue is expected to top US$13 billion. That would represent a 43-per-cent increase from the same time last year.
Eye-popping annual growth is one of Facebook’s specialties. The company has managed to report revenue growth of more than 38-per-cent during the second quarter in each of the past four years as it continues to gobble up advertising dollars.
Facebook’s not-so-secret weapon, meanwhile, is Instagram. In June, Facebook disclosed the photo and video sharing app now has more than one billion users. That’s up from 500 million users just two years ago and the 30 million users Instagram had when Facebook acquired the company for US$1 billion in April 2012.
Well Fargo Securities analyst Ken Sena estimates Instagram will generate US$20 billion in revenue in 2020, which would represent roughly a quarter of Facebook’s total revenue. By comparison, Instagram rival Snapchat has yet to crack US$2 billion in annual sales.
Meanwhile, it appears some investors have already forgotten about the fallout from the Cambridge Analytica data scandal. Facebook’s share price has recovered from an 18-per-cent selloff, after it was revealed in March that millions of users’ data were accessed by the political consulting firm, which worked with Donald Trump’s campaign during the 2016 U.S. presidential election.
In fact, Facebook’s stock has continued to climb based on Tuesday’s closing price, rallying nearly 16 per cent from where it was before the scandal.
