Facebook earnings announcement: 3 things to watch for

Facebook's stock was essentially flat on Wednesday afternoon, ahead of the first-quarter earnings report scheduled to be released after 4 p.m. ET.

Facebook has yet to recover from the fallout over Cambridge Analytica, and CEO Mark Zuckerberg likely relishes the chance to talk about something other than the company's data collection practices.

But he has a fine line to walk: Many analysts will be watching for signs that the company is addressing concerns about users' data security while maintaining its ability to make money from that data.

Here are three things to look for in Facebook's report. 

Advertising revenue

Ads makes up the vast majority of Facebook's income: 98.5 percent of the $12.8 billion it earned last quarter came from ads. And ads are directly tied to Facebook's ability to attract and reach specific user niches. 

Any effect from the Cambridge Analytica revelations -- which broke just weeks before the first quarter ended on March 30 -- will likely be limited. A handful of advertisers announced they were hitting "pause" on Facebook in the last week of the month.

However, ad spending on the platform could be slowing for other reasons. An eMarketer report this week predicted that Facebook's share of the advertising market would decline for the first time this year. That's because other types of advertising -- such as Amazon and video streaming programs -- looks set to chip away at Facebook's dominance. "As those players increase their shares, that leaves less room for Facebook's to grow," the report said.

User time

Last quarter, Zuckerberg revealed that changes to the news feed resulted in users spending about 5 percent less time on Facebook -- a statement that sent the company's stock price plunging.

Zuckerberg maintains that less time isn't necessarily a bad thing, as the company pivots to emphasize what he calls "time well spent."

But Wall Street will be looking for whether user time rose or fell, and ways that could potentially affect Facebook's business.

External studies have come up with similar results. The Pew Research Center in January found that 74 percent of Facebook users went on the site daily -- a slight drop from 76 percent two years ago. (Users of Facebook-owned Instagram showed the opposite trend.) And a Cowen and Co. study found that the typical U.S. social media user spent 53 minutes on Facebook in the first quarter of this year. That's three minutes less than the prior quarter, and five minutes less than the first quarter of last year.

User growth

Over 2 billion people -- a quarter of the world's population -- have a Facebook account. The social platform last quarter reported 2.13 billion monthly unique users a month. Nearly two-thirds of them, or 1.4 billion, used the platform daily, according to Facebook.

But Facebook's dominance in some segments could be waning. Last quarter, the number of daily Facebook users in the U.S. and Canada declined slightly. The slight drop -- from 185 to 184 million -- was the first time the network had registered a drop. Its popularity with the youngest users is also slowing, according to an eMarketer study, with many in the 24-and-younger demographic decamping for rival Snapchat.

Facebook is predicted to lose 2 million younger users this year, eMarketer found. 

Given these trends, investors will be looking for signs of broad-based user growth or flattening in Facebook's numbers Wednesday. As with advertising, Cambridge Analytica effects here are likely to be minor. Public outrage, and the #DeleteFacebook movement, didn't gather steam until the first days of April.