- Facebook (FB -0.8%) hasn't received any downgrades after posting its first sales miss as a public company (while beating again on EPS) thanks to a strong dollar. At least 6 firms (perhaps reacting to the stock price more than earnings) have hiked their targets.
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Many bulls are focusing on Facebook's huge video traffic growth. FBN: "[T]he company had >4B video [views] per day in FQ1, up from >3B in FQ4 and >1B in FQ3. Moreover, mobile is a key driver here as over 75% of FB video [views] are done on mobile." FBR notes video ad prices can be 10-20x display prices on a CPM basis, and expects "ad tech investments in Atlas, LiveRail, and the FB audience network should grease the tracks to enable more video ads.”
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Barclays thinks there "may be significant upside to revenue given tailwinds on both [video] inventory and pricing." SunTrust sees video, Dynamic Product Ads (allow advertisers to quickly promote products from their catalog to targeted users), and a Buy button all acting as 2015 growth drivers.
- Pac Crest (Sector Perform), on the other hand, thinks Instagram and video won't be major 2015 revenue contributors. It also observes Q1 "was the first quarter since early 2013 when total [ad] impressions grew sequentially and price per ad declined sequentially," which leads it to think the impact of the mobile shift and lower right-column ad inventory are mostly finished. On a Y/Y basis, impressions fell 62% and ad prices rose 285%. On CNBC (video), Alpha One Capital's Dan Niles says he sold Facebook into earnings on account of its run-up, but still calls it his favorite company.
- On the CC (transcript), Facebook cut its 2015 GAAP and non-GAAP spending growth guidance on the high end by 5% to 55%-65% and 50%-60%, respectively. Also: While declining to promise Oculus will do a commercial launch this year (its VR headsets are still in beta), CFO Dave Wehner stated 2015 expense guidance "reflects any volumes that we might do in 2015."
- Mark Zuckerberg, meanwhile, stated Facebook now handles over 1B daily mobile searches, that the average Instagram user spends 21 minutes/day on the service, and that Facebook handles over 45B messages/day across its platforms. Sheryl Sandberg noted Facebook/Instagram account for over 1/5 of all U.S. mobile time spent.
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Q1 results, PR, earnings slides (.pdf)