No problem, and thanks for your input. As I mentioned in the article 30% growth over three years I don't think is unreasonable given the initiatives and anticipated growth in corporate spending on online advertising. I also don't see growth dropping down to 15% by the fourth year but left that as a conservative approach. As for 6% growth, you're right in that it may be to aggressive but I believe that over time their will be a significant shift from TV/paper advertising towards online. Currently online advertising is only about 15% of advertising budgets, I don't think it's absurd to think that we could see that expand to 20% or even 25% over the next 5 years, especially given how well online advertising can target its audience. With Facebook's global reach, they will also benefit from the expansion of developing markets. Maybe you'll find this information interesting from ZenithOptimedia...
An ocean, I like that! Certainly very true. I've reiterated the statement many times over to friends, Facebook is not the major player in social networking, it is the ONLY player. Twitter and LinkedIn serve two totally separate purposes and Google+ is, in my own opinion, a joke. Don't get me wrong, I like Google. On several occasions I've owned the stock, and while they do well with search advertising, they need to take a pass on Google+.
I agree that Facebook is basing at the moment. I believe we'll see similar price action as we saw prior to the last earnings call. Stock will probably run higher on anticipation and sell off on the announcement. I'm looking for the company to show more fiscal control over R&D over the next several quarters. Now that they have put into place several initiatives, they need to ease off the spending to see how these initiatives play out. Once they see how they perform then they should move on, building on what works and fixing/removing what doesn't.
Tech Bubble 2.0: Overvalued And Undervalued Stocks [View article]
Thanks for the article, definitely appreciate the insight. I am long AAPL and completely agree with the call on its undervaluation, however I have a different perspective on Facebook. The PE and PEG ratios are extremely misleading because the EPS for 2012 were severely altered by significant spending in R&D and administrative expenses. Costs such as these will not continue at the rate they occurred last year, which was expenditures at the rate of 62% of revenues. The previous two years the company had expenses of 22% and 29% of revenues, a much more reasonable number. I also believe that the extra R&D spending will pay off. Facebook Exchange, Facebook Gifts and the combination of a revamp to news feed to emphasize sponsored stories I anticipate will pay significant dividends. Above that, 64% of companies surveyed said they plan to increase their online advertising budgets versus 2% which said they would be decreasing those budgets. Overall online advertising is expected to make up close to 15% of all advertising spending.
Personally I believe the story of Facebook and there is more to come. You can read my reasoning here: http://seekingalpha.co...
So based on your investment strategy, what you're saying is you won't buy Facebook unless it reaches $0.40 /share. Take the time to actually look into Facebook. The PE ratio is extremely misleading because the EPS (TTM) included significant and abnormally high expenses due to R&D and general administrative expenses that should not be on going. Based on my full year earnings estimate of $0.64/share, Forward PE is around 40 with PEG being around 1.3. Some would argue that this is still to expensive, but company executives have shown a commitment to exploring alternative revenue streams which in my eyes is worth a premium.
The $0.02 EPS was due to significant expenses in R&D as well as general administrative expenses which utilized 62%+ of the company's revenues. For 2010 and 2011 those expenses accounted for only 22% and 29% respectively. I think it's fair to say that the 62% figure will not be ongoing. I am a buyer of the stock anywhere below $28, I think in the near term this is a safe price point for entry. I do believe Facebook can end the year above $40/share, this target price is based upon a discounted cash flow that can be found towards the conclusion of the article.
Here is a link to the Income Statement through morningstar.
Yahoo M&A speculation has Zynga (ZNGA +7.7%) shorts fleeing for the exits. Wunderlich's Blake Harper sees Zynga as a possible buyout target for Yahoo (YHOO), whose M&A chief recently said the company is working on two "significant" acquisitions (without elaborating), as the Internet giant tries to strengthen its mobile/social positioning. 16.4% of Zynga's float was shorted as of Feb. 15. [View news story]
ZNGA's growth opportunities would be severely hindered by a YHOO acquisition IMHO.
The Macy's vs. Martha Stewart Living Omnimedia and J.C. Penney trial continues without any clear winner in sight yet. In a nutshell: 1) Macy's (M) CEO Terry Lundgren became enraged over a plan to place Martha Stewart shops inside of J.C. Penney stores in what his firm calls a breach of contract. 2) Martha Stewart is flabbergasted Lundgren hung up on her. 3) Naturally, JCP CEO Ron Johnson thought he had them both outsmarted. After the dust settles, retail analysts think MSO will suffer the most with its brand tarnished. [View news story]
Analysts have it all wrong. I'm not saying I know the female mind because let's face it no one does, BUT, the Martha Stewart brand isn't going to be tarnished. Look at the brand after the woman whose name titles the brand was placed under house arrest. Come on folks, the average woman doesn't care about the legal battles of JCP vs. M. Buying opportunity in MSO IMHO.
Samuel Adams In Cans Will Justify Boston Beer's High Price Earnings Multiple [View article]
While Sam in a Can isn't a bad idea for growth initiatives, I don't see this playing out the way they anticipate it to. Drinkers of Sam Adams are not your typical mow the lawn and crack a cold one. I won't go so far to say that they are a refined clientele, but the guys drinking Sam Adams play tennis, not lawn darts. As such, I think you'll find a sort of snobbery when it comes to the can. Sure, as you mentioned, the can will capture sales on airplanes and other anti-glass bottle destinations, but don't expect canned Sam to make it in the household fridge.
Growing revenues is not going to be an issue if Apple comes out with a true television and not just a set top box. Integrated iTunes, potential for touch screen, their own video streaming service, the possibilities at that point become endless. While I'm not a fan about the chatter of an iWatch, you can't say this company has lost its sense of innovation just yet. LONG AAPL
Oil is set to fall by 30% this year, says Levitt Capital's Robert Levitt. The impact of increased shale oil supplies have been drastically underestimated by the markets, Levitt says. This increase, when combined with the resolution of pipeline transportation issues, should ease upward pressure on oil prices. "Once we have all these issues straightened out, the price of oil is going to come down and that will be a great boom for the global economy." [View news story]
Be happy the credit/cash spread is only 6 cents! Here in New York the spread is sometimes upwards of 20 cents... Robbery!
Icahn, Loeb And Others Walk Into A Herbalife Trap Despite Ackman's Fair Warning [View article]
Best trade for this stock going into earnings is a Long Straddle or Long Strangle options trade. Options are currently priced for a 3 point move in either direction. I think it's safe to say that with all of the commotion surrounding this company we can easily expect a move greater than 10% over the course of the week.
Like, No... Love Facebook [View article]
Maybe you'll find this information interesting from ZenithOptimedia...
http://bit.ly/YelntV
Like, No... Love Facebook [View article]
I agree that Facebook is basing at the moment. I believe we'll see similar price action as we saw prior to the last earnings call. Stock will probably run higher on anticipation and sell off on the announcement. I'm looking for the company to show more fiscal control over R&D over the next several quarters. Now that they have put into place several initiatives, they need to ease off the spending to see how these initiatives play out. Once they see how they perform then they should move on, building on what works and fixing/removing what doesn't.
Tech Bubble 2.0: Overvalued And Undervalued Stocks [View article]
Personally I believe the story of Facebook and there is more to come. You can read my reasoning here: http://seekingalpha.co...
Like, No... Love Facebook [View article]
Like, No... Love Facebook [View article]
Like, No... Love Facebook [View article]
Like, No... Love Facebook [View article]
Like, No... Love Facebook [View article]
Like, No... Love Facebook [View article]
Here is a link to the Income Statement through morningstar.
http://bit.ly/M6UMtf
Yahoo M&A speculation has Zynga (ZNGA +7.7%) shorts fleeing for the exits. Wunderlich's Blake Harper sees Zynga as a possible buyout target for Yahoo (YHOO), whose M&A chief recently said the company is working on two "significant" acquisitions (without elaborating), as the Internet giant tries to strengthen its mobile/social positioning. 16.4% of Zynga's float was shorted as of Feb. 15. [View news story]
The Macy's vs. Martha Stewart Living Omnimedia and J.C. Penney trial continues without any clear winner in sight yet. In a nutshell: 1) Macy's (M) CEO Terry Lundgren became enraged over a plan to place Martha Stewart shops inside of J.C. Penney stores in what his firm calls a breach of contract. 2) Martha Stewart is flabbergasted Lundgren hung up on her. 3) Naturally, JCP CEO Ron Johnson thought he had them both outsmarted. After the dust settles, retail analysts think MSO will suffer the most with its brand tarnished. [View news story]
Samuel Adams In Cans Will Justify Boston Beer's High Price Earnings Multiple [View article]
Apple Is Not Worth $460 [View article]
Oil is set to fall by 30% this year, says Levitt Capital's Robert Levitt. The impact of increased shale oil supplies have been drastically underestimated by the markets, Levitt says. This increase, when combined with the resolution of pipeline transportation issues, should ease upward pressure on oil prices. "Once we have all these issues straightened out, the price of oil is going to come down and that will be a great boom for the global economy." [View news story]
Icahn, Loeb And Others Walk Into A Herbalife Trap Despite Ackman's Fair Warning [View article]