Facebook earnings beat; shares jump nearly 20%(cnbc.com)
cnbc.com
Facebook earnings beat; shares jump nearly 20%
http://www.cnbc.com/id/100903640
13 comments
Joking with friends last night: "Facebook Liked your status."
I've held the opinion that FB is poised for major user erosion, as a consequence I took a short position in the stock some months ago. However, since they've entered a phase where they're aggressively monetizing, I'm probably going to get out on the next pullback. I still think the conditions are right, but there's also no catalyst event on the horizon.
I've held the opinion that FB is poised for major user erosion, as a consequence I took a short position in the stock some months ago. However, since they've entered a phase where they're aggressively monetizing, I'm probably going to get out on the next pullback. I still think the conditions are right, but there's also no catalyst event on the horizon.
"Markets can remain irrational longer than you can remain solvent." - John Keynes
That's especially true with shorting positions.
That's especially true with shorting positions.
Shorting FB, especially when many analysts have a bearish view, is dangerous. The easy money was to be made in shorting at the IPO.
The "catalyst" you are looking for is a real challenger to FB, which will come one day but most likely not until late 2014
The "catalyst" you are looking for is a real challenger to FB, which will come one day but most likely not until late 2014
The completely random "oh hey this one guy just updated his status" push notifications are at least a step above the arrogantly imperious ones they had going for a few weeks prior to that: I very nearly uninstalled the app after getting a push message reading simply "Update your status."
Wow I have been seeing this and assumed its a bug. This started more than a month back and is really annoying. I think the boost they are seeing is temporary if these shady notifications is driving it primarily.
I also assumed it was a bug!
as a result I uninstalled the app and use the mobile site now, which is far less laggy than the Android app...
as a result I uninstalled the app and use the mobile site now, which is far less laggy than the Android app...
It's shocking how regularly my decision to not trust them with an app installed on my phone gets vindicated. To be fair, this says as much about the state of app permissions on smartphones as it does about how sleazy Facebook is.
And with Facebook Messenger, you can't permanently disable notifications - only for a certain number of hours.
Financial reporting is the absolute worst. Why say something like "estimates called for the social media giant to post earnings of 14 cents per share on revenue of $1.62 billion". Comparing the per-share number to the total revenue tells us next to nothing. Interpretation of the facts aside, they should at least report the relevant facts.
Going to the primary source tells us that the numbers are $333M income on $1.813B of revenue, and the same quarter last year was a ($157M) loss on $1.184B of revenue. So revenue increased by ~$629M, and income increased by ~$490M.
Going to the primary source tells us that the numbers are $333M income on $1.813B of revenue, and the same quarter last year was a ($157M) loss on $1.184B of revenue. So revenue increased by ~$629M, and income increased by ~$490M.
There is a lot of bad financial reporting out there, but this isn't it. They aren't "comparing the per-share number to the total revenue." They are comparing the current quarter's EPS to the EPS for the same quarter a year ago and to the consensus expected EPS. The difference between the expected EPS and the actual EPS accounts for the jump in share price. EPS is just a way of normalizing earnings on a per share basis, kind of like how we quote the price per share (about $31 right now) rather than the total market cap.
"Facebook's earnings excluding items came in at 19 cents per share versus 12 cents per share a year earlier."
What were the excluded items?
http://www.investopedia.com/terms/e/excludingitems.asp
What were the excluded items?
http://www.investopedia.com/terms/e/excludingitems.asp
"Share-based compensation and related payroll tax expenses and income tax adjustments" are excluded from Facebook's non-GAAP income (loss) from operations measure.
Facebook believes "varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718" make it difficult for investors to gauge the "underlying performance" of "business operations" across time periods and companies. Excluded payroll tax expenses "are tied to the exercise or vesting of underlying equity awards," and to Facebook's stock price "at the time of vesting or exercise", which again may obfuscate "the operating performance".
https://www.sec.gov/Archives/edgar/data/1326801/000132680113... FB's Q2 2013 Reported Results
Facebook believes "varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718" make it difficult for investors to gauge the "underlying performance" of "business operations" across time periods and companies. Excluded payroll tax expenses "are tied to the exercise or vesting of underlying equity awards," and to Facebook's stock price "at the time of vesting or exercise", which again may obfuscate "the operating performance".
https://www.sec.gov/Archives/edgar/data/1326801/000132680113... FB's Q2 2013 Reported Results
Mainly share based compensation. The GAAP rules are quirky about when you recognize the expense. Last year there was a $1B expense recognized for RSU's issued prior to 2011, which makes the GAAP numbers hard to compare.
From a cursory glance at my phone, it seems that their P/E is somewhere around 576. I get that it's supposed to be a different paradigm and all that, but WHAT?!?!
Those five shares I bought to be a part of internet history at the IPO are finally making a comeback
If you had instead invested that money in a ETF that follows the S&P 500, you could have $2.109 in profits today. (Assuming $190 initial investment and S&P growth of 1.11% since May 20th)
I am waiting for Facebook to start their own AdSense alternative. There is a lot of money there.
Seriously. This is the one reason I invested in Facebook stock. They are sitting on immense profit potential in the form of contextual advertising.
I would guess it's because the context is relatively obscure whereas with Google it's not.
Yes, they can uniquely identify you by your profile more than Google can, but for many who don't 'like' everything left and right (or like everything they come across) how would you determine what ads to show them? Just because my friends like something doesn't mean I will. And that's a wasted impression.
Google on the other hand knows what you want - you're actively searching for it. It's pretty straightforward for those who want to serve ads to target what they want to target.
Yes, they can uniquely identify you by your profile more than Google can, but for many who don't 'like' everything left and right (or like everything they come across) how would you determine what ads to show them? Just because my friends like something doesn't mean I will. And that's a wasted impression.
Google on the other hand knows what you want - you're actively searching for it. It's pretty straightforward for those who want to serve ads to target what they want to target.
I think you're confusing Adsense with Adwords -- Adsense is the offsite platform Google runs; if Facebook told websites using their non-existent off site platform what to advertise to you, that would very quickly turn into a fountain of money
This is why I regularly trade facebook. I easily have made 40% on their stock this year, and this boost is going to knock me over 50%
Amazing! So they simply turn ads on for mobile and it makes over $200 million in a quarter. Jaw dropping!
As someone who has clicked less than maybe 20 Internet/mobile ads in their life, thus clearly not party of the demographic companies target, I wonder what is wrong with my brain if the majority of people click on ads. (And probably spam mail too)
Disclosure: I'm a Facebook employee working on something completely unrelated to ads, and I always use AdBlock on my desktop machines, but I will say this for our mobile advertisements: they can be genuinely useful. Just last week, I got an "offer" on my phone, from The Gap, for 25% off my next purchase. Claiming the offer didn't send any of my information to the gap, but it prompted me to shop there for pants when I normally would have gone elsewhere, and I actually ended up buying something. At 25% off, it cost less than or comparable to my normal shopping locations, so it was a win for me, and I bought something from The Gap that I otherwise wouldn't have, so it was a win for the advertiser. A far cry from the bad taste that online advertising usually leaves in my mouth.
That sounds to me like the argument people always provide in favor of targeted advertising. What distinction do you see between desktop and mobile that made the latter more useful for you?
Desktop advertising has never before offered me a discount for having seen the advertisement; it's usually along the lines of "go look at this". By having a more tangible "carrot", if you will, I was much more receptive to the request for attention.
The counterpoint to that would be that many brands would prefer to not use discounting as an advertisement strategy.
I can see how mobile offers at Facebook can be beneficial, but it's not totally clear how that gets extended out to advertisements without discounting.
I can see how mobile offers at Facebook can be beneficial, but it's not totally clear how that gets extended out to advertisements without discounting.
and who didn't buy that portable usb charger from beyond the rack for something like $12? At least ~10 of my peers, me included, bought one!
It is, literally, the first time some sort of ads works for me and my friends.
I think the way it worked is 2-3 of my close friends bought one, so it started to pop in my feed too, I bought one and it continued to jump to our friends feed.
"beyond the rack" seems like one of those sign up clubs. Do you have to pay a subscription fee with them?
What is a "portable usb charger"? A 12v car adapter or something else? Did it really cost $12? Who makes it? Did you pay for shipping? I'm asking because I'm trying to figure out if your comment is sarcasm or not - to me $12 seems like a lot of money for something that doesn't have a brand name guarantee behind it.
I may just be completely off base, but I'm confused on why this was such a great deal.
What is a "portable usb charger"? A 12v car adapter or something else? Did it really cost $12? Who makes it? Did you pay for shipping? I'm asking because I'm trying to figure out if your comment is sarcasm or not - to me $12 seems like a lot of money for something that doesn't have a brand name guarantee behind it.
I may just be completely off base, but I'm confused on why this was such a great deal.
Sorry, no it was not sarcasm.
It was from nomorerack not beyond the rack. I did not pay for shipping, not sure about the brand, etc...
it's an item equivalent to this one: http://www.ebay.com/itm/141025286801?hlp=false&var=
not sure if same brand or not, it was tagged at ~$40 on nomorerack, with the special deal at $12.
it works well and I'm really happy with it :)
it's an item equivalent to this one: http://www.ebay.com/itm/141025286801?hlp=false&var=
not sure if same brand or not, it was tagged at ~$40 on nomorerack, with the special deal at $12.
it works well and I'm really happy with it :)
I use their mobile web site because the app automatically slurps up my contact list.
When I scroll down on my news feed I have to be careful to avoid starting the swipe on an ad, because just touching an ad is a click. Touching a legit news feed item doesn't affect my swipe like that.
The cynic in me wonders how many others are caught out like this.
When I scroll down on my news feed I have to be careful to avoid starting the swipe on an ad, because just touching an ad is a click. Touching a legit news feed item doesn't affect my swipe like that.
The cynic in me wonders how many others are caught out like this.
I would guess a good amount :)
Before the interweb, advertising was primarily about impressions. After the interweb, impressions are actually still valuable, even if the advertising is not obviously priced that way.
A small minority of people ever click on ads. Of course, a small minority of Americans watch American Idol, too:)
> if the majority of people click on ads
The majority of people do not click on ads.
The majority of people do not click on ads.
The only ads I've ever clicked on (and actually ended up buying something from the App Store) are Facebook mobile ads. Just a couple of times but they were good ones.
I bought at ~21 blended; I'm feeling good right now, but see this as a real long term bet. FB's position is so stratospheric that the opportunities to monetize are nearly endless; the rub is going to be in picking the right paths, not the lack of paths.
It really should be noted that no company with Facebook's P/E ratio has maintained that level for a long term. Facebook is still so overvalued that it will certainly come down from where it is now. If it doesn't, it would be the first company to do so. Even if it were to increase it's earnings, just a quick glance at Google Finance shows it's P/E 2,231. Regardless of other financials, that ratio is so off the wall that it could not be justified without an unprecedented amount of earnings growth. Making the claim that Facebook is the greatest company in the history of public companies is a stretch.
[1] Cliff Asness of AQR's "Bubble Logic": http://papers.ssrn.com/sol3/papers.cfm?abstract_id=240371
[1] Cliff Asness of AQR's "Bubble Logic": http://papers.ssrn.com/sol3/papers.cfm?abstract_id=240371
> Even if it were to increase it's earnings, just a quick glance at Google Finance shows it's P/E 2,231.
Google Finance has not recalculated the ratios yet. At present, Facebook is trading around 100x earnings.
Google Finance has not recalculated the ratios yet. At present, Facebook is trading around 100x earnings.
This is slightly off topic, but can someone explain this to me.
I'm looking at the Google Fiance page for FB: https://www.google.com/finance?q=NASDAQ%3AFB
There I can see that the price is indeed up, but this is "pre-market":
Pre-market: 31.10 +4.59 (17.31%) Jul 25, 5:29AM EDT
Can someone explain to me how this pre-market works in the background? Is is an summation of an actual work queue of orders that are waiting to be placed once the market opens?
I'm really interested how this works from the general technical perspective.
I'm looking at the Google Fiance page for FB: https://www.google.com/finance?q=NASDAQ%3AFB
There I can see that the price is indeed up, but this is "pre-market":
Pre-market: 31.10 +4.59 (17.31%) Jul 25, 5:29AM EDT
Can someone explain to me how this pre-market works in the background? Is is an summation of an actual work queue of orders that are waiting to be placed once the market opens?
I'm really interested how this works from the general technical perspective.
Hooray for annoying stupid fuckign ads all over Facebook.
Facebook is not going away. They can turn on as many revenue streams as they want, and people will not leave.
"AOL is here to stay."
"Myspace is here to stay."
"Facebook is not going away."
"640K should be enough for anyone."
The only certainty is change.
The only certainty is change.
Only a Sith deals in absolutes.
On the flip side, myspace/aol/etc are still in use.
Things that large don't stop on a dime. I do think facebook is hitting a slowing period, the growth days are long behind them. It's only a matter of time until something new sweeps everyone away. Once that happens it will be the new myspace. Where advertisers don't care to market as much. It won't die but it will become less important, and eventually become irrelevant. FBs push notification campaign shows how they are trying to stay relevant.
On the flip side, myspace/aol/etc are still in use.
Things that large don't stop on a dime. I do think facebook is hitting a slowing period, the growth days are long behind them. It's only a matter of time until something new sweeps everyone away. Once that happens it will be the new myspace. Where advertisers don't care to market as much. It won't die but it will become less important, and eventually become irrelevant. FBs push notification campaign shows how they are trying to stay relevant.
Back in the 1990s, movies would include an AOL Screen Name (or something similar, room name or something - but AOL specific) in exactly the same way that movies and other advertisements today specify "like us on facebook." At some point that will stop happening as Facebook loses its shine.
You're thinking of AOL keywords.
Arbitrary list? Why not use Google, Apple, Intel?
Not arbitrary... list to support his opinion of Facebook.
It's arbitrary because if we're going to assume that facebook is going away, we can just as easily assume that google, intel, etc will.
> Arbitrary list? Why not use Google, Apple, Intel?
Hardware is much more important than software. Low level software (like operating systems) is much more important than web applications or services.
Hardware is much more important than software. Low level software (like operating systems) is much more important than web applications or services.
I just saw a Myspace ad on ESPN this afternoon. That tells me they're not gone...
> The only certainty is change.
Very true, which is why you should trade regularly. Strictly speaking, you can't win unless you play. In the long run, everything dies, so you have to ask yourself: is $FB a good bet for the next year? next 2 years? next five years?
Very true, which is why you should trade regularly. Strictly speaking, you can't win unless you play. In the long run, everything dies, so you have to ask yourself: is $FB a good bet for the next year? next 2 years? next five years?
Stockbrokers encourage regular trading, it's how they make their money and their clients lose theirs, churn is another name for it.
You're better off randomly selecting a bunch of investments and sitting on them.
You're better off randomly selecting a bunch of investments and sitting on them.
While that's true, it's also not a bad way to get money. You have to first be comfortable with risk, and then play the game.
Wow. I'm at break even. Almost.
I made my first stock investment yesterday when I bought 20 shares! I must be a savant.
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At first I tapped on every one of these and landed in FB. After a few weeks, I realized something was off (or FB was just trying to trick me into thinking a wall post was relevant).
Anyhow, its a interesting/shady tactic to re-engage passive FB users, possibly one of several strategies that are getting them results on mobile. Here is how to turn off push notifications - https://www.facebook.com/help/103859036372845 - I'm sure most FB users can not figure this out.