For the first time in a long time, Facebook will have a chance to talk about something other than Cambridge Analytica. Or at least something in addition to Cambridge Analytica.
Facebook earnings mean Facebook gets to talk about something besides Cambridge Analytica
For at least one day, Facebook might be able to get out from under its Cambridge Analytica shadow.
That’s because Facebook reports first-quarter earnings on Wednesday, a report and investor call usually dominated by discussion around Facebook’s video strategy, its plans to make money from Facebook Messenger and its (soon-to-be maximized) ad load.
But this quarter feels like it could be different. Hovering over Facebook’s earnings is the Cambridge Analytica rain cloud — a damning narrative that claims Facebook doesn’t do enough to take care of its users’ data or privacy.
It’s been the story for six weeks, and Facebook has tried to reverse this story without much luck. Its policy changes have been met with criticism, and its blog posts answering its own “hard questions” have been incomplete and mocked.
When Facebook sent CEO Mark Zuckerberg to answer questions before Congress earlier this month, he looked thoughtful and polite, but the questions weren’t tough enough to give anyone a sense that Facebook has officially come clean about all of its data-collection practices.
The company is really in a lose-lose situation. When it hasn’t spoken out, everyone demanded answers. Now it’s giving all kinds of answers, but they don’t appear to be the answers everyone is looking for.
Which is all to say that Facebook is still burdened by Cambridge Analytica.
But Facebook earnings are almost always a positive thing for the company. Facebook’s user base usually gets bigger, it’s revenue and profits increase, and the company dishes out just enough info about future business plans to keep everyone pumped about the world of targeted advertising.
And even though Facebook has been saddled with a lot of bad press because of Cambridge Analytica — including an entire #DeleteFacebook movement that included support from one of WhatsApp’s co-founders — none of that should impact Facebook’s first-quarter earnings. That’s because the vast majority of users’ ill will didn’t come about until April, after the quarter was over. (Check back in come July ...)
A strong quarter could distract from Cambridge Analytica, even if just temporarily. Facebook should also use the call to take more tough questions about what it’s doing to clean up its act. How will clamping down on data sharing impact its business? Will Facebook’s GDPR compliance hurt the bottom line? These are questions we’d still love to have answered.
A few other notes about Wednesday’s earnings:
- Did people spend less time than usual on Facebook in Q1? I assume so. That’s because Zuckerberg said in January that changes the company made to its News Feed algorithm would result in less time spent on the service. It’ll be interesting to see how much, and what impact, if any, that had on the business.
- Are Facebook’s ad prices increasing? The logical conclusion to people spending less time on Facebook is that ad impressions would decrease — meaning that ad prices would increase, given less inventory. We spotted this trend early on after the algorithm change was rolled out, but Facebook should provide an official update.
- Is Facebook’s U.S. audience still declining? Facebook lost daily users for the first time ever in the U.S. and Canada last quarter. It’s not a great sign, given that this is the company’s most valuable user group. Facebook CFO Dave Wehner said on last quarter’s call that Facebook executives “don’t see this as an ongoing trend.” We’ll find out.
Analysts are looking for Facebook to report profits of $1.36 per share on revenue of $11.4 billion for the quarter, according to Yahoo Finance. That would be growth of 42 percent year over year, the lowest since Q3 2015 (though Facebook is comparing to much larger revenue totals now than it was then).
This article originally appeared on Recode.net.
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