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Facebook reportedly in talks to buy solar-powered drone maker

  • TechCrunch reports Facebook (FB) is in talks to buy Titan Aerospace, a maker of solar-powered drones that can fly for five years without having to land. The acquisition price is said to be $60M.
  • Facebook reportedly wants to use Titan's drones to offer Web access (presumably including Facebook services) to unconnected parts of the world, beginning in Africa. It would start by making 11K of Titan's Solara 60 drones.
  • Mark Zuckerberg has been heavily promoting his Internet.org initiative to carriers and fellow tech giants, and has suggested the WhatsApp acquisition complements this effort.
  • TechCrunch's report comes eight months after Google unveiled Project Loon, an initiative meant to provide 3G or faster Internet speeds to "rural, remote, and underserved areas" via hot-air balloons.
  • If a Facebook/Titan deal provides a lift to UAV stocks the way the Google/Boston Dynamics deal gave a lift to robotics stocks, AeroVironment (AVAV) could get a boost.
  • Update: A source tells CNBC Facebook will buy Titan for $60M.
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Comments (38)
  • monfrere
    , contributor
    Comments (581) | Send Message
     
    I'm lost. Is Internet.org part of Facebook now? Shouldn't he NOT be using shareholder funds to further his personal goals? Or are people in Africa without access to phones people that advertisers are trying to reach?
    I applaud him for the efforts to connect the world, but I think there should never be a use of Facebook funds for this goal. Especially if he's implying that it factored into his $19B decision to buy Whatsapp.
    4 Mar, 09:27 AM Reply Like
  • andypochta1
    , contributor
    Comments (1055) | Send Message
     
    Monfrere, it is puzzling indeed.

     

    On the brighter side, FB paid $19 Billion to that Ukrainian guy for the Whatsapp app just in time. He can now provide all the help Ukraine may need single-handedly, who needs $1 Billion package from US.
    4 Mar, 09:39 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4300) | Send Message
     
    Except most of it is still tied up in stock, as far as I'm aware (and FB longs should be concerned if he's already sold up...).
    4 Mar, 11:05 AM Reply Like
  • monfrere
    , contributor
    Comments (581) | Send Message
     
    Did the deal even close yet? either way it was 4B in cash.
    4 Mar, 11:11 AM Reply Like
  • Brian Bobbitt
    , contributor
    Comments (1905) | Send Message
     
    Would you plant a tree and stop it from fruiting to the maximum? Go FB. I'm buyin' more.
    Capt. Brian
    The Lost Navigator
    4 Mar, 09:30 AM Reply Like
  • andypochta1
    , contributor
    Comments (1055) | Send Message
     
    Great idea Captain, looks like FB is switching to not-for-profit business model, no need to show losses, should pay off big time..
    4 Mar, 09:54 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4300) | Send Message
     
    Actually BB, there are many fruit and flowers that benefit from pruning...
    4 Mar, 11:06 AM Reply Like
  • diaboliqueguan
    , contributor
    Comments (441) | Send Message
     
    FB should think about providing drinkable water and access to electricity than a drone that provides internet to some people in Africa where they cant afford a bloody computer nor smartphone!
    4 Mar, 12:46 PM Reply Like
  • Henry B
    , contributor
    Comments (36) | Send Message
     
    I can see where access to the Internet can help quite a lot of people in Africa. There was a documentary on a boy who invented a solar power water pump from just dead appliances lying around. He learned everything through books from libraries.

     

    http://bit.ly/1fF8LJR

     

    He's an outlier, however, imagine if the population had easy access to information on the Internet to encourage, entice young minds to help make their environment better? Information is key and it will be a corner stone in bringing less fortunate countries/continents into a new age by distributing information on DIY projects to improve living standards.
    4 Mar, 03:23 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8610) | Send Message
     
    Sign of a social media bubble.
    4 Mar, 09:39 AM Reply Like
  • benitus
    , contributor
    Comments (1940) | Send Message
     
    It seems like the FB acquisitions are not going to stop. Even though there are sound reasons (which I won't care to elaborate) for such acquisitions, I don't think that they should be so fast and so soon, unless he's using his personal funds, as investments. But it's unsettling to know that he's squandering assets of FB on his great scheme, which is why I've just increased my shorts on FB.
    4 Mar, 10:26 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4300) | Send Message
     
    Maybe he's planning to use them on out doing Google maps with better resolution, but again, I don't see what benefit that will be to FB longs. Somebody should remind him it's no longer his money?
    4 Mar, 11:09 AM Reply Like
  • ronjohn26
    , contributor
    Comments (86) | Send Message
     
    I had my first sets of short at £71.40 and I Bought a set for $68 because my latest research says FB is heading to $ 80 in one month and may not goes back to $60 , it may come back and settle around $70 if it reach around $80 .So my next short is around $80
    5 Mar, 04:20 AM Reply Like
  • benitus
    , contributor
    Comments (1940) | Send Message
     
    ronjohn.....if you don't mind my saying so, your price targets seem a little ambitious because, barring further announcements from FB, $80 seems too far away to reach within the next three months. Just because it has recovered to $70 over the past two days doesn't mean that fresh support has materialized in the past couple of days. It has briefly recovered with the general market's improvements and I'm ready to short it some more at $70 today. FYI, many speculators will be waiting to continue shorting FB if it does go higher. What goes up will always come down. Live long and prosper, my friend. God bless.
    5 Mar, 07:27 AM Reply Like
  • SaltyDog62
    , contributor
    Comments (711) | Send Message
     
    Why bother to advertise to people in remote areas? Usually means no money.
    4 Mar, 10:43 AM Reply Like
  • coloneldebugger
    , contributor
    Comments (904) | Send Message
     
    It's about data mining, then about advertising.

     

    There's pretty much nothing left to invade, I mean mine, in the lives of modern western civiliaztion.
    4 Mar, 01:54 PM Reply Like
  • SaltyDog62
    , contributor
    Comments (711) | Send Message
     
    Why bother to mine data from people who are poor and most likely never buy anything, except maybe food for that day!
    5 Mar, 12:14 AM Reply Like
  • RhodysBroker
    , contributor
    Comments (11) | Send Message
     
    This is like trading the #5 overall plus three players for On draft day for Ray Allen, only to be reviled by fans, while deftly structuring the K.G. trade under the radar a short time afterward.

     

    Overpaying for Ray, of course, is the WhatsApp deal. 60M for unchecked drone production that can fly well above the 15-60K foot range that the FAA owns......and ultimately provide WIFI to the rest of the world incrementally is the follow-up bombshell.

     

    Google providing 3G w balloons, Zuck offering wifi with drones. Checkers and chess.
    4 Mar, 10:51 AM Reply Like
  • monfrere
    , contributor
    Comments (581) | Send Message
     
    Where's the part where they make $19B back?
    4 Mar, 10:55 AM Reply Like
  • Topcat
    , contributor
    Comments (427) | Send Message
     
    With WhatsApp you can also send videos, photos, voice messages etc, and using internet protocols, not phone SMS. It has 46x,xxx,xxx users and is growing a million users a day, so I think FB is probably eliminating the competition. Plus, the subscription is $1/yer per user.
    4 Mar, 12:32 PM Reply Like
  • monfrere
    , contributor
    Comments (581) | Send Message
     
    Topcat, what is the point you are making? I'm not sure who you are talking to?
    4 Mar, 01:51 PM Reply Like
  • StepUp
    , contributor
    Comments (468) | Send Message
     
    What a waste of shareholder money.
    4 Mar, 10:54 AM Reply Like
  • futuretrade
    , contributor
    Comments (698) | Send Message
     
    Just wonder what kind of changes will take place in the counties that don't have web access?
    4 Mar, 11:35 AM Reply Like
  • varan
    , contributor
    Comments (3818) | Send Message
     
    The drones can be used to provide sewage facilities and water to remote areas. Suck up the former from the air, clean it up, and spray it down to the natives. A self-sustaining autonomous system.
    4 Mar, 12:21 PM Reply Like
  • medzjohn
    , contributor
    Comments (254) | Send Message
     
    FB is blather. Web access is the medium. To breathe, FB (like Goog/youTube) must break the stranglehold of third party channel providers.
    4 Mar, 12:29 PM Reply Like
  • SoCalNative
    , contributor
    Comments (488) | Send Message
     
    Wait? What?!
    4 Mar, 12:41 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1047) | Send Message
     
    If FB follows up on this it will probably benefit UBNT greatly. UBNT equipment is being used for project loon already. Even if they do not follow through this just underscores how strong UBNT's position is.

     

    The rest of the world demands internet and UBNT will provide the equipment for it.
    4 Mar, 12:59 PM Reply Like
  • chazzzy
    , contributor
    Comment (1) | Send Message
     
    does anyone know whta the symbol is for Titan aerospace
    4 Mar, 01:06 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1047) | Send Message
     
    I do not believe it is publicly traded.
    4 Mar, 01:07 PM Reply Like
  • Bouchart
    , contributor
    Comments (776) | Send Message
     
    Further proof that Zuckerberg has lost his mind.
    4 Mar, 01:26 PM Reply Like
  • duggard
    , contributor
    Comments (106) | Send Message
     
    All the polarity between the longs and the shorts is reflected in the volatility of the stock. I expect the volatility to continue through earnings and that is how I intend to play it. Keep debating everyone!
    4 Mar, 01:41 PM Reply Like
  • coloneldebugger
    , contributor
    Comments (904) | Send Message
     
    Zuckerberg is about two weeks away from buying Fiat to sell Canyoneros
    4 Mar, 01:51 PM Reply Like
  • GCBanalyst
    , contributor
    Comments (5) | Send Message
     
    You bears just don't get it do you? I realize it must be tough to see the forest through the trees when you've missed out on a near 3-bagger (or god forbid lost money shorting it), but stop sulking for one minute and think about what's really going on here. I'm not trying to make the argument that FB is cheap, in fact quite the opposite. The market has given FB its blessing with a high valuation, and unlike a value stock which is expected to return capital with dividends and buybacks, a growth company should use its rich currency to fund projects and acquisitions that widen its moat and give it a more defensible long-term market position. So, from a capital management perspective FB is acting as a prudent growth company should, vis-a-vis deals like WhatsApp and Titan (which at $60M is akin to a fly on an elephant's a$$). I applaud management for properly reading the market's cues (i.e. high valuation = license to spend) and hope to see them continue to invest in untapped opportunities (yes, even internet connectivity in Africa!) and user growth beyond the current core user base.

     

    Disclosure: Long FB and writing 1-2 month upside calls as stock bases out the high 60 - low 70 range.
    4 Mar, 02:12 PM Reply Like
  • monfrere
    , contributor
    Comments (581) | Send Message
     
    The problem is that they have 1.2B customers. Not much room left to be a growth stock. They grew and then the monetized. They can try their double secret monetization, but the fact is that they have made a total of $3.1B in profit over their entire 10 year history and they have spent over $20B on acquisitions. The $4B in cash they paid represents more than all the money they have ever made. To be polite, I'm not convinced that is a sustainable model.
    4 Mar, 03:28 PM Reply Like
  • GCBanalyst
    , contributor
    Comments (5) | Send Message
     
    Au contraire monfrere but I would object to your thesis that user growth is exhausted and the business has been fully monetized. First off, FB has penetrated just over half of the 2.3B people connected to the internet (an amazing feat in and of itself), but this still leaves two-thirds of the 7 billion people on the planet who have yet to connect to the internet. I'm not expecting this dynamic to change overnight in places like Africa, etc. But with the ease and cost effectiveness of connecting via mobile, not to mention investments like Titan to provide the connectivity infrastructure; a potential doubling of the current addressable "connected" market is very real possibility in the next five years. Secondly on monetization, I'd agree that the core U.S. FB platform is likely close to peak ARPU, but the EU ARPU is less than half that of the U.S., and Asia/ROW customers are monetized at less than a fifth of the rate of U.S. customers. And this doesn't even consider Instagram, which represents a vast (and growing) greenfield opportunity that has yet to be monetized at all. No doubt there is some heavy wood to chop which could come at a hefty cost (i.e. expensive acquisitions), but certainly not insurmountable given the scale and visibility of the brand globally.

     

    Lastly, to put things in perspective a bit on deal valuations, how laughably cheap does the $1B price tag for Instagram look now, while just two short years ago the very same skeptics were calling that deal an abomination?
    4 Mar, 04:38 PM Reply Like
  • monfrere
    , contributor
    Comments (581) | Send Message
     
    taking your points in order:
    1) All users are not created equal. Users have different ARPU not because they are not being monetized enough, it's because advertising to poor people in poor countries is not something advertisers are willing to pay a lot of money for.
    2) There are only about 1.4B people in the world living on more than $10 per day. That means that the next 2B people to get smart phones fall into the category of "not great to advertise to". If you think that the Asia ARPU is low, wait until you see what advertisers are willing to pay to advertise to a tribesman in Africa who borrows his phone and gets wifi from a drone because he cant afford... well... anything.
    3) Instagram has not been monetized much (it does have some ads) because users there get annoyed faster with ads. Why do you think they don't monetize it yet? Because they hate money? Because they dont like to monetize things? Because they need it to get bigger? No, because their tests return bad numbers and they are trying to figure out how to monetize it without alienating their user base
    4) Whatsapp is a commodity, plain and simple. To collect 19B from it is a pipedream. They had 20M in revenue last year. Also, people seem to forget that the infrastructure required to send 50B messages per day and store those and sign people up is very expensive. This is going to be a massive cash drain for the foreseeable future.
    5) If Facebook were to resell Instagram to the greater fool, they would certainly get more than $1B, I agree. I dont think they will. I dont think they have gotten any significant revenue from it yet nor have they articulated a clear plan as to how they are going to get it. I disagree that from an intrinsic value point of view you can claim that Instagram is worth $1B or more.
    4 Mar, 04:49 PM Reply Like
  • Tricky
    , contributor
    Comments (1583) | Send Message
     
    Hmm. It's not immediately obvious how FB will make money off this, but just for fun I will brainstorm -- don't tase me dude!

     

    In general, I don't see it working as the typical ad model, for reasons other commenters have stated.

     

    Selling the ISP service itself? Don't underestimate this. There are actually some interesting stories of how rural African fisherman get much better pricing on their catches by having real data via cell phone of the going rates at the primary markets rather than being at the mercy of crooked middlemen who have been ripping them off for decades. That data is worth a lot money to those fisherman. Extend that to other forms of data for other uses cases, and now web access can have such value that the rural communities/citizens will figure out how to pay for it (e.g., get a microloan).

     

    Maybe get into such data provision businesses?

     

    With the ISP, now have more potential customers for WhatsApp?

     

    Porn!

     

    Okay, that's all I got for now.
    4 Mar, 08:27 PM Reply Like
  • monfrere
    , contributor
    Comments (581) | Send Message
     
    I'm not sure Facebook as an ISP is the model their shareholders invested in.
    5 Mar, 09:30 AM Reply Like
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