Facebook’s cheery revenue projections belie turmoil

Facebook is nearing the end of its toughest year as a public company. Ahead of results on Tuesday, analysts are hoping the news can’t get any worse.

The social-media giant is expected to report a third-quarter revenue of US$13.8 billion, up 34 per cent from a year earlier. Operating profit will be $5.79 billion, according to analyst estimates compiled by Bloomberg.

Those cheery projections belie another quarter of turmoil that included executive departures, a huge privacy breach, threats of regulation, and struggles to contain misinformation ahead of key U.S. elections. The shares rose 2.1 per cent at 10:05 a.m. in New

York. Three months ago, Facebook stunned Wall Street with a second-quarter revenue miss and a warning that growth would slow while spending rises. On Tuesday, investors will be watching user engagement numbers and expenses closely.

“As long as management doesn’t surprise with more negative announcements about longterm revenue and expense trends, we think the stock could have a good 4Q,” Macquarie analyst Ben Schachter wrote in a recent note to clients.

Facebook has lost more than $200 billion in market value since a record high in July and the shares are trading near the lowest level since May 2017. Investors are concerned that use of its main social network has plateaued, while future sources of growth will be less profitable.

Facebook monthly active users are expected to total 2.28 billion in the third quarter.