Facebook (FB) is scheduled to report results of its third fiscal quarter after market close on November 1, with a conference call scheduled for 5 pm ET. What to watch for: 1. BULLISH AD CHECKS: On October 19, Stifel analyst Scott Devitt noted that Facebook management has highlighted, numerous times, that ad load growth on its core news feed will become a less significant driver of revenue growth. Given that backdrop, Devitt said that third-party ad agency Kenshoo’s reading on Q3 social spending appears bullish relative to his and to consensus estimates for Facebook. He kept a Buy rating and $200 price target on the stock. More recently, Wedbush analyst Michael Pachter said he views Facebook as well-positioned to defend itself from competition for user mindshare and attention from other apps. Pachter expects Q3 results above consensus levels, as ad products across its suite of applications, including Instagram, continue to command higher pricing and drive growth. He reiterated an Outperform rating and $225 price target on the shares. Earlier this month, Credit Suisse analyst Stephen Ju raised his price target for Facebook to $235 from $190 as he increased his mobile news feed estimates on the heels of positive advertiser checks. 2. “CHALLENGES” WITH TEENS: Meanwhile, Piper Jaffray analyst Sam Kemp said early in October that his firm’s bi-annual survey of over 6,000 teens shows “clear challenges” for both Facebook and Twitter (TWTR). The youngest of teens “are simply not adopting these platforms,” Kemp told investors. The survey indicated 82% and 81% of teens are using Snapchat (SNAP) and Facebook’s Instagram, respectively, and that these platforms share 93% of their users with each other. Kemp believes this is positive for Instagram as it’s “ad unit and advertiser adoption are well ahead of Snap.” Kemp reiterated an Overweight rating on Facebook and a Neutral rating on Snap. 3. CHANGES AFTER RUSSIA FINDINGS: On October 12, Facebook COO Sheryl Sandberg said at an Axios event that the company owes the American people “not just an apology, but determination” for their role in enabling Russian interference during the election. The same day, Facebook CTO Mike Schroepfer said Facebook has started to overhaul its political advertisement process and may implement some changes before U.S. elections next year, Reuters reported. Last Friday, Rob Goldman, VP of Ads at Facebook, announced that the company is going to make advertising “more transparent, and not just for political ads.” Goldman added: “Starting next month, people will be able to click View Ads on a Page and view ads a Page is running, whether or not the person viewing is in the intended target audience for the ad. All Pages will be part of this effort, and we will require that all ads be associated with a Page as part of the ad creation process. We will start this test in Canada and roll it out to the US by this summer, ahead of the US midterm elections in November, as well as broadly to all other countries around the same time.”
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