Facebook needs strong earnings to distract from its D.C. backlash

Dion Rabouin
Reproduced from CivicScience; Chart: Axios Visuals

Facebook and its CEO, Mark Zuckerberg, have been on another wild ride.

The state of play: They've been dragged on television by opportunistic members of Congress and are fielding multiple antitrust inquiries, while attempting to push forward with the Libra digital currency. Libra is facing mounting resistance from regulators and legislators around the globe.

  • Its latest quandary is a refusal to ban political ads that include false statements. Data shows a wide majority of users want all political ads off the platform.

Reality check: Despite all the bad publicity, the one thing Facebook has been able to do quarter after quarter is deliver solid earnings.

By the numbers: Analysts are expecting earnings of $1.90 per share and Q3 revenue of $17.3 billion, 26.3% higher than last year, when the company reports after the bell on Oct. 30.

  • However, Facebook is on track to post earnings per share of $6.26 on revenue of $70.2 billion for the year, an annual EPS decline of 19.07%.
  • It would be the first year of negative EPS growth since 2012, the year Facebook debuted on the Nasdaq.

Go deeper: Platforms give pols a free pass to lie

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What's next

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Why it matters: The company has been warning for several quarters that ad growth (where nearly all of its revenue comes from) is expected to slow late this year due to saturation in its main News Feed. As a result, Facebook has been investing more in monetizing its "Stories" feature on both its main app and Instagram.

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Why it matters: The free speech banner Facebook is waving used to be shared by most of the big social media companies. A Twitter exec once called the company "the free speech wing of the free speech party."

  • But amid an extraordinary backlash toward Facebook from critics angered at its role in spreading misinformation, its rivals are distancing themselves — and are using the moment to frame their free speech principles as better suited to the era of social media.
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