Facebook’s Turn

So far so good. The second-quarter scorecard looks good so far. More than six out of every 10 companies have posted earnings that came in better than analyst estimates.

Now it’s Facebook’s turn. At about 4:00 p.m. ET on Wednesday, Facebook will report its earnings for the June quarter. Investors everywhere will be waiting for the results. This young company—only 14 months old—fascinates investors.

Here’s a company that started in a Harvard dorm room about ten years ago and is now publicly traded, it has more than one billion users, and its CEO is only 29 and is worth more than $14 billion. As cool as all that sounds, Facebook has been a money-losing investment for many people. Since FB went public a year ago the stock has plunged to $26 from its opening trade at $38. Still, just mention the name Facebook and people are curious about the company and whether they should buy or sell the stock.

So Wednesday night investors will be poring over the numbers to find out if Facebook can transform itself into a growth machine. Wall Street analysts expect the company’s quarterly profits will increase by 14 percent and revenues to go up by 37 percent. David Garrity of G.V. A. Research said that’s not strong enough. Garrity, who will appear on “Nightly Business Report” Wednesday night, said for Facebook to be true growth stock, it needs profits to expand by roughly 25 percent and revenues by 40 percent. Right now he has a “hold” on the stock.

What is he looking for in the earnings release? He wants to see a big increase in revenue from mobile ads and a boost in the size of Facebook’s user base. The social network now has more than a billion users but they are growing at a slower pace and there’s been a decline in their time spent on Facebook. He will be also listening for any comments from CEO Mark Zuckerberg on how the company is dealing with competition from newer services such as SnapChat and upcoming innovations from Facebook.

What do you want to hear from our guest, David Garrity, on NBR Wednesday night? And how do you feel about the stock of Facebook. Let us know.

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