Facebook, Inc. (NASDAQ: FB), the social media company unexpectedly changed to reporting solely GAAP earnings last quarter amid the U.S. Securities and Exchange Commission’s push to standardize earnings on the common standard, which confused many investors and analysts. When second quarter earnings are reported after the market closes on Wednesday, everyone should be more prepared to see Facebook’s new standard.
Analysts will keep an eye on Facebook’s advertising revenue, as the company slows the rapid addition of ads to its Newsfeed offering, something that the company has warned about for up to a year now. That being said, the pressure for the other company properties, namely Instagram, is being ramped up.
As of late, Instagram seems to be the main growth area for Facebook, with additions to the app that are similar to Snap Inc.’s SNAP Snapchat app, such as images that disappear after 24 hours, creative lenses, as well as Instagram Stories, which seem to be especially popular. The app has already surpassed Snapchat in terms of daily active user’s. Instagram has also been taking ad dollars from Snapchat, while also undercutting prices.
Facebook has never disclosed Instagram’s financial performance individually, but has been selling ads on the app since 2013. Facebook, under new revenue recognition rules, could face the same fortune as Alphabet Inc. GOOGL, GOOG, does with YouTube, which eventually could force it to disclose revenue attributed to Instagram.
Analysts do not current appear to be concerned about how the company will make money, as billions of people spend time in Facebook apps. The potential for growth, which comes with Instagram and other properties will in turn be the focus.