Facebook (FB) is expected to report fiscal fourth quarter earnings on Wednesday, January 30th, after market close. The whisper number is $0.17, two cents ahead of the analysts estimate. Whisper numbers range from a low of $0.12 to a high of $0.21.
This is only the third earnings report for Facebook since it went public in May of last year. In July of last year the company reported earnings of 12 cents, in-line with the whisper number. Following that report the stock dropped 34% in one month. In October of last year the company reported earnings of 12 cents, which was two cents ahead of the whisper number. The stock jumped 24% in after hours trading. The joy was short-lived for holders of the stock (and for those traders who took a position at market open next day) as the stock gave back all those gains within fifteen trading days.
On a more positive note FB has been on a slow and steady rise since mid-November moving from a low of 18.87 to today's level of 30.79. The majority of investors polled are expecting the company to provide a neutral to positive outlook:
- Positive 60%
- Neutral 20%
- Negative 20%
Is monetization the key? Just after Facebook had made the :big" announcement regarding the new "Graph Search" we asked investors the following question in our weekly markets confidence survey, "Will Google or Facebook be the future of internet search?" Here are the results:
Perhaps people just don't understand what "graph search" is. We believe the more important question will be how does Facebook monetize this and all future "big" developments. Judging by the response to our question, any entrance into the search arena may be a very difficult road to take. A pop in the stock following this earnings report may depend on not just better numbers, but how well they communicate monetizing what they have and where they intend to go.
Enter your Facebook expectation and view more earnings information here.
Knowing how likely a stock's price will move following an earnings report will help you make better trades. Many investors believe that beating or missing the whisper number has the greatest impact on stock movement. If the number is exceeded, the stock is rewarded and prices move higher. If the number is missed, the stock is punished and prices move lower. Unlike the analysts estimate, the "whisper number" from WhisperNumber.com has actually been proven to have a greater impact on stock movement.
Since 1998, WhisperNumber.com has been tracking and publishing "crowd sourced estimates" for earnings. We call these earnings expectations whisper numbers. The "crowd" that provides us with whisper numbers are primarily individual investors and traders just like you that have registered with our site.
We are an independent financial research firm. We have no affiliations with investment banks, investment management, or corporate organizations that could compromise our data or analysis. (So no relationships with the bad guys or so-called professional analysts).
As for our data collection, methodology, and price reaction accuracy: for the past 15 years we have remained consistent with data collection and methodology, and our data has proven itself over that time. We also have two independent academic studies supporting the premise that investor expectations for quarterly earnings (our whisper numbers) provide greater returns when used as an investment vehicle, and have a greater impact on stock movement than analysts consensus estimates.
A company's "price reaction" to the whisper number expectation is the key - on average companies that exceed the whisper are "rewarded," while companies that miss are "punished" following an earnings report.
According to the Wall Street Journal, "positive surprises are becoming so common they are nearly universal. They are predetermined in a cynical tango-clinch between companies and the analysts who cover them. All the numbers are gamed at this point." This is why the proprietary whisper number we provide is a more useful and viable alternative to analysts estimates.
All trading involves risk and the information presented is not intended to be a recommendation of any kind.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.