Report: Facebook Investors Monitoring User Drop Off Rate Following Data Scandal

User losses and a drop-off in advertiser spending will be the focus for investors as Facebook gets ready to release their first-quarter results this week.

As Facebook prepares to release their first-quarter results this week following the company’s most recent user data scandal, investors are focusing on user loss figures and watch for a drop-off in advertiser spending, according to Bloomberg. Facebook’s shares have dropped by ten percent this year, largely due to the company’s user data scandal which allegedly resulted in the user data of approximately 87 million users accessed without express permission and resulted in Facebook CEO Mark Zuckerberg testifying before Congress.

Facebook is expected to report a daily active user count of approximately 1.45 billion, an increase from their fourth quarter when the company reported 1.4 billion daily active users. Monthly active users will likely rise to 2.19 billion up from 2.13 billion in the previous quarter. The company recently saw its first-ever decline in North American users and saw user time spent on the platform decline by five percent in the December month. Investors will be watching closely to see if these trends continue through the first few months of the new quarter.

Facebook users are also reportedly spending 24 percent less time on the platform, this may be linked to the company’s recent change in their news feed algorithm which has shifted to focus on posts from friends and family to the detriment of content publishers. CEO Mark Zuckerberg told shareholders that he expected a drop in user engagement because of the algorithm change, saying: “By making these changes, I expect the time people spend on Facebook and some measures of engagement will go down.”

Analysts are expecting to see a 42 percent increase in sales, to $11.4 billion, but investors are worried about future income after Facebook COO Sheryl Sandberg revealed that “a few” advertisers had stopped serving ads on Facebook’s platform following the recent user data scandal. It’s estimated that Facebook’s net income increased to approximately $1.38 a share.

Analysts at MKM discussed Facebook’s handling of the user data scandal saying that they believe the company will take new aggressive measures to prevent the misuse of user data. “While we think that existing expense guidance offers plenty of room to support such efforts, we think that commentary to appease regulators and users is a higher priority for management than near-term comfort to investors,” said MKM analysts in a recent report.