This is the first earnings report for Facebook (NASDAQ:FB) since it went public in May of this year. The whisper number is $0.12, in-line with the analysts' estimate. The range of expectations run from a low of $0.05 to a high of $0.18. The majority of investors polled are expecting the company to provide a neutral to positive outlook:
- Positive 43%
- Neutral 43%
- Negative 14%
Since we have no historical data to determine potential price movement, let's take a look at companies from the same industry that have already reported earnings this quarter:
- AOL Inc. (NYSE:AOL): reported earnings of $0.13, $0.03 ahead of analysts, $0.05 ahead of the whisper number, up over 8% (intra-day) since report.
- Baidu Inc. (NASDAQ:BIDU): reported earnings of $1.24, $0.12 ahead of analysts, $0.14 ahead of the whisper number, up over 4% (intra-day) since report.
- Google (NASDAQ:GOOG): reported earnings of $10.12, $0.08 ahead of analysts, $0.41 short of the whisper number, up just 0.6% (intra-day) since report (+3.4% including after hours price movement).
- Yahoo! (NASDAQ:YHOO): reported earnings of $0.27, $0.04 ahead of analysts, $0.05 ahead of the whisper number, up just 0.6% (intra-day) since report.
- Zynga Inc. (NASDAQ:ZNGA): reported earnings of $0.01, $0.05 short of analysts, $0.06 short of the whisper number, trading flat (intra-day) since report, but down 39% including after hours trading.
The common thread among these companies is obvious: top expectations and see a positive price reaction. ZNGA missed and the company tanked, but there were also extenuating circumstances. If the industry has set the tone, Facebook needs to top expectations or face price weakness.
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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.
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