Facebook says it has changed. Its profit may show by how much

The Cambridge Analytica scandal has cost Facebook a lot of trust and goodwill. But it hasn't really cost the company any money — yet. Today the company will provide its first update of the financial toll it expects.

Investors clearly felt Zuckerberg came out ahead when he was grilled by Congress earlier this month: Facebook stock price rose by about five per cent during two days of hearings. The largely geriatric group simply didn't understand the platform, let alone the intricacies of how the company makes so much money.

Facing Wall Street will be another matter entirely. Investors poring over Facebook's earnings, which are set to be revealed after stock markets close on Wednesday, will not be so easy to distract.

Revenue expected to rise, despite data scandal

Market analysts like Benj Gallander say Facebook's earnings are actually going to come in quite strong.

"Because of the timing, about 80 per cent of the quarter was already finished before they had their recent crisis," he said. "That means that the numbers are still likely to be excellent."

Facebook revenue growth has been explosive, Gallander said. Facebook's sales in 2015 were about $18 billion US. Last year that had soared to almost $41 billion.

Gallander said that isn't going to change on one earnings report, so what investors should watch for instead ​is what the company communicates about the future. Future revenue, future user growth and future regulation are all now large and looming questions that will define the company's path forward.

Looming regulation

Facebook's chief operating officer, Sheryl Sandberg, has already admitted that "a few" advertisers have paused their operations with the social media giant. But Gallander said it's likely not a large number.

For now, the company's most pressing issue is what type of red tape the government might regulate it with over the long term.

"A huge question is whether the company will face legal roadblocks that will force it to revamp operations and also have to pay huge fines," Gallander said.

Europe has already taken some of those steps. The new regime called General Data Protection Regulation comes into effect on May 25. It's meant to give users more control over their data. Companies that don't comply will face fines of up to four per cent of their annual global revenue.

In Facebook's case, that's almost $2 billion.

User engagement is the key

But regulation will take time. The real concern for Facebook comes not from governments, but from its users. Ophir Gottlieb, the CEO of Capital Markets Laboratories, said Facebook took off because everyone knew someone who was using it. That's how the company was able to grow to 2.2 billion monthly active users seemingly overnight.

So never mind new customers. Keeping their existing ones logged on will be key for the company from here on out. Gottlieb said the privacy story already has some people thinking twice about their use of the platform. Some have quit and others are simply spending less time on the platform.

"The only thing to watch, the only thing that can break (Facebook) is the user (and) engagement," he said. "What created its virality can also kill it."

But even the sharpest analysts with the finest-toothed combs won't find that story in some obscure number, buried in a footnote toward the end of Facebook's earnings release. The real test will come when Zuckerberg faces investors and analysts in a conference call later on.

Zuckerberg's personal fortunes soared by some $3 billion after his testimony before Congress.

How his fortunes will fare this time around may well be up to him, too.

Follow Peter on twitter: @armstrongcbc