Facebook rattled nerves on Wall Street in October when the company pointed to signs of eroding teen interest in the social network, as well as the company’s plan not to ramp up on News Feed ads.
Those issues will still be in the spotlight when Facebook reports results after the market closes on Wednesday, though investors will likely also focus on the bright side, led by the expected gains from video ads and Instagram.
Analysts expect on average for Facebook to report a profit of 27 cents a share on revenue of $2.35 billion. For the year-earlier period, the Menlo Park, Calif.-based company reported a profit of 17 cents a share on revenue of $1.59 billion.
“Beyond [fourth-quarter] results, we’ll be focused on management’s commentary on ad load, teen engagement, 2014 opex growth, and the launches of Instagram ads and auto-play video ads on Facebook,” J.P. Morgan analyst Doug Anmuth told clients in a note.
“We believe advertiser demand and ads quality should more than offset slower increases in ad load, thereby driving higher relevancy and click-through rates, and ultimately greater ad quantity over time.”
Mobile platforms will once again be in focus, as they are a fast-growing segment of Facebook’s business, making up, 49% of total ad revenue in the last quarter and becoming a big bright spot for investors.
“We believe investors remain focused on this metric,” Sterne Agee analyst Arvind Bhatia told clients in a note. He expects Facebook to report that mobile now represents 52% of Facebook’s total ad revenue.
Facebook remains well-positioned in the online ad market, Topeka Capital’s Victor Anthony told clients in a note.
“Pricing increased materially in the fourth quarter on the strength of increased demand for Facebook’s inventory due to better ad ROI,” Anthony said.
Facebook’s comments on Instagram and video ads are also bound to drew attention as the next potential drivers of growth.
The company has taken a cautious approach to video ads, apparently due to worries that they turn off users.
But Bhatia wrote: “The launch of Video Ads on Facebook has been expected for some time, but management has delayed the introduction a few times to ensure user experience remains positive. Based on the recent introduction of the auto-play video feature on Facebook and a leaked presentation that speaks to the first-quarter introduction of new video insights for advertisers, it appears video ads on Facebook are imminent.”
This article originally appeared on MarketWatch.com.