Facebook FB is set to report second-quarter 2020 results on Jul 29.
The company’s e-commerce push is expected to grab limelight in the to-be-reported quarter. Ad sales are expected to have struggled due to the coronavirus-related headwinds and weakness in the travel and automotive industries.
It introduced Facebook Shop — a free service that makes it easy for businesses to set up a single online store to be availed by customers on both Facebook and Instagram.
Facebook Shop will be powered by third-party services, including Shopify SHOP, BigCommerce, and Woo.
Markedly, the coronavirus pandemic has hit small and medium-sized businesses hard. Hence, the company’s new free service is expected to have gained adoption in the second quarter.
Facebook also introduced Businesses Nearby that allows users to see the latest posts from businesses within a certain geographic radius.
The company’s focus on bringing more local businesses online is expected to boost its competitive footprint against the likes of Etsy ETSY and Amazon AMZN.
Click here to know how the company’s overall second-quarter performance is likely to be.
Jio Investment to Expand Facebook’s India Footprint
Facebook also announced an investment of $5.7 billion to buy a 10% stake in Jio Platforms Limited, the digital arm of Reliance Industries.
The move is expected to bring together Facebook’s WhatsApp with JioMart, a joint venture between Jio and Reliance Retail to enable people to connect with businesses.
The deal is expected to have helped Facebook expand its presence in India, the company’s largest market in terms of subscriber base.
In fact, Facebook is expected to benefit from growing subscriber base in Asia Pacific. The Zacks Consensus Estimate for this Zacks Rank #3 (Hold) company’s second-quarter Asia-PacificDaily Active Users is pegged at 685 million, indicating a rise of 11.4% from the year-ago quarter reported figure.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Augmented Reality (AR) Focus to Aid Top Line
Facebook is gaining on AR camera effects on Messenger that helps brands to gain traction across customers. Further, AR Studio on Instagram enables users to create new face masks and AR-world effects. Additionally, AR-based ads on Facebook platforms are contributing to ad revenues.
Further, its strengthening focus on 6DOF devices—Oculus Quest and Rift headsets, remain noteworthy. Notably, 6DOF headsets can track orientation and position. Moreover, progress on Oculus Quest is likely to aid the company in making consumer-ready AR glasses.
Late second-quarter, Facebook announced that it will cease selling entry-level Oculus Go Virtual Reality headset it launched in 2018. Markedly, the $399 priced Oculus Quest headset, which Facebook launched in 2019, has gained significant traction thanks to amazing games like Beat Saber, Dance Central and The Climb.
Moreover, acquisitions have played an important role in deciding Facebook’s growth trajectory in the virtual reality as well as AR space.
The company also acquired computer vision startup Scape Technologies in a move to build out its AR capabilities. Scape has reportedly built a localization engine that’s designed for city-scale AR. Using a cloud-based Visual Engine, the technology can build and reference 3D maps in the cloud, allowing devices to tap into a unified perception of the world around them.
Notably, higher sales of Oculus products drove Payments and other fees, which surged 80% year over year to $297 million in first-quarter 2020. The consensus mark for Payments and other fees is pegged at $328 million, suggesting growth of 25.2% from the figure reported in the year-ago quarter.
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