Facebook's growth in 2016 will hinge on these three things

Facebook CEO Mark Zuckerberg is back in the building just in time for Facebook to release its Q4 earnings on Wednesday.

With 2016 underway, investors will be itching for not only a recap of the quarter, but a look ahead at the new year.

Instagram, video ads, and, to a much lesser extent, Oculus, are the three key drivers of the business that analysts from FBR Capital Markets, Bank of America Merrill Lynch, and SunTrust expect to see this year.

The 'story' of 2016

Last quarter, 78% of Facebook's ad revenue came from mobile and research company eMarketer predicts that that will rise to 82% in 2016, driven largely by Instagram and mobile video formats.

RBC Capital's Mark Mahaney even called Instagram the "story of the year" for Facebook, though estimates for how much revenue the photo-sharing site could pull in range from $500 million to more than $2 billion. eMarketer estimates that Instagram will represent 20.1% of Facebook's total mobile ad revenues in the US.

"While news feed, app install and carousel ads have strong traction, video ads may be the highest profile new media format for Facebook," analysts at BAML write. As video viewing increases - FB reported 8 billion video views daily in October, up from four billion in April - analysts expect Facebook to improve and ramp up its video ad experience.

"We think video ads will become the biggest business for Facebook," SunTrust analysts write.

Finally, although Oculus is still more of a longer-term bet, each bank mentioned in recent notes that it hopes to hear more about the virtual reality business on Facebook's call. The first Rift headsets will ship in March. SunTrust expects the company will sell ~3 million units this year, which it calculates could equate to $1.8 billion in revenue.

Facebook's investment plan

Investors are also keen to hear about how much money Facebook plans to spend this year.

Although Facebook warned investors that 2015 would be a big investment year, FBR notes that the company is prone to coming in at the lower end of its expense outlook range.

"For 2016, we are projecting operating expense growth of 43% versus ~41% Street consensus," SunTrust writes. "We note that Facebook tends to guide conservatively on expense growth initially, then reduces the guide through the year as visibility improves."

Ultimately, it's a fine line.

"If Facebook goes too high, people will get spooked that they're spending too much money," Barclays' Paul Vogel says. "But if you don't actually spend enough, people will worry why you're not spending enough for growth. They've got to thread the needle in there."

From Yahoo Finance, here are average expectations for Facebook's fourth quarter financial results:

Q4 adjusted earnings per share (EPS): $0.68, up from $0.54 in the year-ago period.

Q4 revenue: $5.37 billion, up 39% from $3.85 billion in the year-ago period.