Facebook Earnings Preview: Here’s What Will Drive Reactions

The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.

Facebook (NASDAQ:FB) will report Q4:12 (ending December) results after market close on Wednesday, January 30, and host a conference call at 2pm PT (dial-in: 866- 554-3009, conf. ID:  85750523, webcast: http://investor.fb.com/results.cfm).

We expect solid Q4 revenues from a slew of new products, mobile growth, and increasing user engagement. We estimate Q4 revenue of $1.52 billion, inline with consensus, and EPS of $0.14, compared to consensus of $0.15. The company did not provide guidance. We believe that EPS upside will be driven by Custom Audiences, Facebook Exchange, Gifts, and Sponsored Stories, among other products. Results should reflect management’s commitment to sustained revenue and profit growth, while improving the user and marketer experience.

We expect strong mobile usage and monetization growth to continue. In Q3, mobile MAUs reached 604 million, up 61% y-o-y, or 60% of total MAUs. Mobile users are more active than their desktop peers, with mobile users 30% more likely to use Facebook on a given day. In Q3, 14% of ad revenue (≈ $150 million) was from mobile, a percentage that should meaningfully increase in Q4.

We expect…