What To Expect After Facebook Earnings

Facebook Inc. (FB) reports Q2 2020 earnings after the July 30^th closing bell in the United States, with Wall Street analysts looking for a profit of $1.38 per-share on $17.35 billion in revenue. The stock rose 5.1% after meeting Q1 estimates in April and then added another 21% into this morning’s opening print near 233. The company has chosen not to provide Q2 or fiscal year guidance due to the ongoing impact of the COVID-19 pandemic.

Facebook Held Back By Political Headwinds

The stock has struggled since May, with growing political headwinds persuading on-the-fence investors to stand aside for now. Activists have been pushing for an advertising boycott in the last few weeks, chastising the social media giant for publishing discredited reports and conspiracy theories, mostly from the right wing. It’s also faces Congressional scrutiny about monopolistic practices, with CEO Mark Zuckerberg and other high tech executives called to a Wednesday committee hearing.

Florida Republican Congressman Matt Gaetz filed a criminal referral against Facebook earlier this week, citing alleged censorship directed against conservatives. Gaertz insists that “Mr. Zuckerberg repeatedly and categorically denied his company engaged in bias against conservative speech, persons, policies, or politics and also denied that Facebook censored and suppressed content supportive of President Donald Trump and other conservatives.”

Wall Street And Technical Outlook

The string of controversies hasn’t fazed Wall Street, which rates the stock as a ‘Strong Buy’, based upon 30 ‘Buy’ and 4 ‘Hold’ recommendations. No analysts are advising shareholders to sell their positions at this time. Price targets currently range from a low of $185 to a street-high $305 while the stock is trading more than $25 below the median $259 target. This placement bodes well for additional upside if the company can shake off persistent political pressures.

Technically speaking, Facebook broke out above two-year resistance around 220 in May and stalled above 240 just one week later, easing into a sideways pattern that’s posted 4 failed breakout attempts into July. Selling pressure is now increasing, favoring a bearish reaction if quarterly results fail to top modest expectations. Short-term sentiment may also come into play on Thursday if Zuckerberg’s Wednesday testimony sets of a new round of controversies.