Instagram, Oculus: Here's What Victor Anthony Is Watching Into Facebook Earnings

Facebook Inc FB is scheduled to report its Q4 earnings report after Wednesday's closing bell. Analysts estimate the social media company to earn $0.68 per share on $5.37 billion in revenue. The company has beaten estimates in at least seven straight quarters.

Axiom Capitol analyst Victor Anthony told CNBC there are three major things he's watching from Facebook's report.

Ads

"When I conduct checks with advertisers on [Facebook's] platform, they say that the ROI has only been increasing as time goes," Anthony said. "So because of that, they're spending a lot more to allocate for that. They see tangible results and the ones who are focused on conversions, they're seeing it directly because those conversion lead directly into a sale."

Related Link: What Wall St. Is Watching When Facebook Reports Earnings This Afternoon

The Wall Street Journal noted that, "Ads delivered on mobile phones account for more than 75% of Facebook's revenue. That figure is expected to rise in the coming year, driven partly by video ads and the photo-sharing mobile app Instagram. Last year, Instagram beefed up its advertising capabilities and allowed companies to place ads directly in users’ news feeds."

Instagram

Anthony is expecting between $125-$150 million in revenue and $1 billion in 2016. Facebook bought the photo-sharing platform in April 2012 for $1 billion.

"I think it's more of a $20 billion valuation," Anthony said. "They just started monetizing Instagram in earnest in the fourth quarter."

Oculus Rift

Facebook showed off its virtual reality product earlier this year at the Consumer Electronics Show in Las Vegas. It did not disappoint.

"This year, the impact will be just form the product sales, and more so entertainment and video games," Anthony said. "But longer term you'll get real estate previews, travel previews. I also think there's an education component to it as well. But those are all just longer-term impacts."

The social media company purchased Oculus Rift in 2014 for $2 billion.

Twitter

Anthony was asked by the CNBC hosts if Facebook would be interested in buying out Twitter Inc TWTR. The analyst thinks Alphabet Inc GOOGL's Google would actually be a better fit for Twitter.

"[Facebook is] replicating some of the same features that Twitter is doing right now, so I don't see it," Anthony said.