TODAY'S CHARTS: Why Facebook earnings could show a big surprise to the upside

Today’s a big day for Facebook (FB) shareholders with the company set to release Q2 earnings after the close.

Here’s what to expect from earnings, and why, according to some analysts, there could be a major surprise to the upside.

The bad news: slowing revenue growth

Facebook, at the end of the day, is an advertising company—97% of its revenue comes from ads.

Here’s the bad news: Facebook has been warning for the past year that revenue growth in 2017 is going to slow “meaningfully.”  During last quarter’s earnings call, Facebook’s CFO noted, “Ad loads will play a less significant factor in driving revenue growth after mid-2017.”

That’s in part because Facebook ran out of space to put ads in its News Feed, and its largest and most profitable user base–North America–is already highly saturated at 80% of the population over 14.

There’s only so much more growth you can expect. But even so, revenue growth has been around 50% for the past few quarters.

This quarter investors anticipate revenue of about $9.2 billion, or growth of 43%-45% from a year ago. That would be the smallest growth since 2015, but for any other company a 43% jump in revenue is pretty darn good.

The good news: Facebook revenue tracks a key Google metric

Another area of concern for investors: Earnings of Google parent Alphabet disappointed, as the company reported cost per click on ads was down 26% from a year ago. That news hit Facebook hard on Tuesday.

Here’s the good news: Analysts at Citi note that another key metric in Google’s earnings report could mean a big upside surprise for Facebook.

Citi analyst Mark May shows that Facebook’s ad revenue has been highly correlated with Google’s “core sites'” revenue at 93% over the last five quarters.

Using that metric, May predicts a 51% increase in Facebook ad revenue versus the 43%-45% investors expect. And that would put earnings per share at $1.44, versus the current estimate for $1.13.

Stick with Yahoo Finance for more on Facebook. We will have the earnings report live today on the Final Round, starting at 3:55 p.m. ET.