Meta Platforms Inc (META)

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Facebook Expected to Show Mobile Growth

--Facebook expected to post surge in fourth-quarter revenue Wednesday

--Company is expected to show more traction in mobile-ad business

--Analysts see company reporting a profit of 15 cents a share on revenue of $1.51 billion

By Benjamin Pimentel

Facebook Inc. (FB) is expected to post a surge in fourth-quarter revenue Wednesday afternoon, as analysts believe the social media giant is gaining from a new wave of products and services.

Facebook is expected to point to more traction in its mobile ad business. Investors are banking on this, with the company's stock up more than 15% since the year began and up about 40% over the last three months.

But the stock is still down about 19% from its IPO price of $38. Facebook shares slipped more than 5% on Tuesday to close at $30.79, following a sector-wide selloff.

Analysts polled by FactSet on average expect the Menlo Park, Calif.-based company to report a profit of 15 cents a share, on revenue of $1.51 billion. For the year-earlier period, Facebook reported revenue of $1.13 billion, according to regulatory filings with the Securities and Exchange Commission before the company's initial public offering last May.

Mark Mahaney of RBC Capital noted the run-up on the shares and cited several driving factors, including "signs of reduced reliance on Zynga, mobile monetization traction, the passing of lock-up expirations, and a more reasonable valuation floor." He rates the stock as outperform.

"We continue to like Facebook shares and view the company as arguably the most under-levered name in the Internet sector--i.e., it's the company that has pulled the least number of growth levers to date," he wrote in a note Friday.

Facebook offered investors a pleasant surprise in its last earnings report in October, when it said 14% of its total ad revenue now comes from its mobile business. And some analysts expect the company to report even stronger momentum this time around.

That was partly the basis of an upgrade from Raymond James earlier this week. In raising Facebook to outperform, analyst Aaron Kessler cited "expectation for increasing monetization driven by mobile, new ad formats and international."

Mr. Kessler speculated that mobile ads could now make up about 26% of Facebook's total ad revenue.

Wedbush analyst Michael Pachter said he expects "strong mobile usage and monetization growth" to continue in the fourth quarter.

"Results should reflect management's commitment to sustained revenue and profit growth, while improving the user and marketer experience," he wrote in a note. Mr. Pachter also believed that the share of mobile in Facebook's total ad revenues "should meaningfully increase in the fourth quarter."

Morgan Stanley's Scott Devitt said Facebook's disclosures about its mobile momentum could be key for the stock. "In our view, positive stock catalysts include Facebook reporting total advertising revenue growth of more than 45% year-over-year and mobile revenue comprising more than 25% of total," he wrote.

Write to Benjamin Pimentel at [e-mail]

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