Facebook: The Social Standard - Initiating Coverage With A $155 Price Target
Altum Research • 97 Comments
Altum Research • 97 Comments
Dec. 16, 2014, 3:59 PM
- Internet stocks have posted substantial losses after a morning market rally proved short-lived. The Nasdaq is down 1.2%.
- In addition to Google, which has made new 52-week lows, Facebook (FB -3%), Twitter (TWTR -4.7%), Amazon (AMZN -3.5%), and Netflix (NFLX -3.2%) are among the underperforming names. Other decliners: Z -5.5%. TRLA -5.4%. MELI -5.4%. ZNGA -4.9%. ZU -3.2%. ANGI -3.4%.
- The selloff comes even though Goldman upgraded its rating for the sector to Attractive from Neutral today. The firm noted Internet stocks are collectively down 16% over the last 12 months (maybe 18%-19% after today), and that forward EV/EBITDA multiples have contracted significantly.
- Internet/social media ETFs: FDN, PNQI, SOCL
Dec. 13, 2014, 4:10 PM
- Facebook (NASDAQ:FB) is no longer including Bing (NASDAQ:MSFT) results within Facebook Search. The social networking giant says it made the move because it's "focused on helping people find what’s been shared with them on Facebook," and insists it continues to "have a great partnership with Microsoft in lots of different areas."
- It was less than a week ago that Facebook expanded the scope of its internal search platform, adding the ability to search within posts that have appeared within a user's news feed. Moreover, in a move that could make Facebook a bigger indirect rival to traditional search engines, the company plans to eventually extend keyword search to all publicly-shared content.
- As it is, Facebook didn't offer the most direct approach to accessing Bing results - users typically had to click/tap on a "See more results" option, then choose from a list of suggested queries in a right-hand column box. "We don't think a lot of people will come to Facebook to do web searches," Mark Zuckerberg once admitted. However, with Facebook handling over 1B queries of all kinds each day, it still acted as a valuable traffic source.
- Meanwhile, Microsoft has rolled out a slew of new Azure cloud infrastructure and app platform services for the second time this fall (previous). Among the new offerings: 1) A high-performance (SSD-based) storage option for Azure virtual machines. 2) Performance and management improvements for the Azure SQL Database service. 3) An improved search service for 3rd-party apps.
- In addition, previously-announced services such as RemoteApp (cloud Windows app hosting) and Azure Active Directory (cloud identity/access management) are now generally available.
Dec. 11, 2014, 7:02 PM
- Oculus VR (NASDAQ:FB) has bought Nimble VR, a startup said to be developing "machine learning and computer vision capabilities to enable high-quality, low-latency skeletal hand tracking."
- It has also bought 13th Lab, a startup working on creating "an efficient and accurate" way to acquire/reconstruct 3D models in real-time. Oculus: "The ability to acquire accurate 3D models of the real-world can enable all sorts of new applications and experiences, like visiting a one-to-one 3D model of the pyramids in Egypt or the Roman Colosseum in VR."
- Also: Oculus has hired NYU prof./motion capture expert Chris Bregler. Bregler, who has done work for Disney, H-P, and LucasFilm, will be directing a "vision research team" at Oculus.
- The moves drive home Oculus' long-term goal of seeing its VR platform used for applications that go well beyond gaming. They follow Samsung's recent launch of the Oculus-powered Gear VR, The Gear VR, which sells for $199-$249 and relies on a Galaxy Note 4 to provide its display and camera, is aimed at developers and early adopters rather than mainstream consumers.
- Meanwhile, Mark Zuckerberg states during a Q&A session Facebook has been thinking about adding a "dislike" button, albeit while cautioning he doesn't want it to act as a way to shame users. Zuck suggests the button could act as a way to express sympathy over a sad event.
Dec. 10, 2014, 11:25 AM
- Instagram (FB +0.6%) has surpassed 300M monthly active users (MAUs) less than nine months after topping 200M, and 15 months after surpassing 150M.
- The mobile photo-sharing platform now has more MAUs than Twitter claimed at the end of Q3 (284M). It also has ~3x as many MAUs as Snapchat was reported to have in October.
- Facebook had 1.35B total MAUs at the end of Q3, and WhatsApp, which Facebook finished acquiring early in Q4, topped 600M in August. Facebook's Messenger apps surpassed 500M in November, after the company unbundled messaging from its core apps.
- Instagram adds over 70% of its users are now outside the U.S., up from 65% in March, and that shared photos have risen to 30B+ from 20B. In spite of the 50% MAU growth, average photo uploads/day have only risen to 70M from 60M (implies fewer uploads per MAU).
- Also: Instagram says it's following Twitter and Facebook proper's lead in supporting verified accounts for public figures and companies, many of whom claim millions of followers on the platform.
- Previous: Facebook sees Atlas giving Instagram's ad sales a boost
Dec. 8, 2014, 2:30 PM
- Facebook Search (FB -0.5%) has been updated to support searching for keywords within posts, photos, and other content that has previously appeared in a user's news feed. The feature is initially launching to PC and iOS users; Android support will arrive later.
- For now, Facebook doesn't plan to sell mobile search ads, or any new keyword-based ads in general. But as Google (NASDAQ:GOOG) can vouch, offering such ads could prove very lucrative long-term. While Facebook has a treasure trove of data about its users, it knows relatively little (compared with Google and other search engines) about what a user is interested in buying at a particular moment. Keyword searches can help change that.
- Product manager Rosseau Kazi says Facebook also plans to eventually provide keyword searches for publicly-shared posts, a move that would make it a bigger indirect threat to traditional search engines. "Facebook has a wealth of information you can’t get anywhere else."
- Facebook is also finally bringing Graph Search to mobile. Though launched to much fanfare in early 2013, Graph Search hasn't lived up to expectations thus far, as users found its approach to queries (for example, searching for all friends who live in Seattle who work for Starbucks) too complicated relative to standard search.
- Mark Zuckerberg reiterated Facebook's commitment to Graph Search in a spring interview, while adding the product is aimed more at mobile than PCs.
Dec. 5, 2014, 2:17 PM
- Facebook's (FB +1.8%) just-launched Atlas ad-buying/measurement platform will allow marketers to measure the performance of campaigns running across both Facebook proper and Instagram. With the former's ad sales and impressions far larger than the latter's, cross-platform measurement could provide a much better view of an Instagram ad's performance.
- Given Instagram ads often consist of magazine-style brand ads, judging their performance solely based on clicks and resulting online purchases/conversions can be misleading. "The current way we measure digital is flawed," says Facebook VP Brian Boland. Aside from Atlas, Facebook is relying on offline purchase data to get a better read on an ad's effectiveness.
- Google is also trying hard to give marketers better data about online brand ad campaigns. Facebook's efforts could ultimately have big implications for its video ad sales, given a large chunk of TV ad spend is focused on branding.
Nov. 26, 2014, 12:58 PM
- Facebook (FB +2.1%) and Twitter (TWTR +2.6%) are rallying on a sleepy pre-Thanksgiving trading day. The companies have respectively seen 21.9M and 16.1M shares traded thus far vs. 3-month averages of 38.3M and 28.1M.
- Several other Internet stocks (both U.S. and Chinese) are also moving higher. Z +2.3%. TRLA +3%. BITA +5.1%. EJ +6.7%. SFUN +2.6%. VIPS +3.3%. SOHU +2.9%.
- Facebook is at its highest levels since selling off in late October due to its Q4 revenue and 2015 spending guidance.
Nov. 25, 2014, 2:46 PM
- "Not surprisingly, billionaires reduced their energy allocations (NYSEARCA:XLE) during Q3," says Direxion, unveiling the quarterly rebalance for the iBillionaire Index (which serves as the benchmark for the IBLN ETF). Attention was instead shifted to healthcare (NYSEARCA:XLV) and materials (NYSEARCA:XLB), with companies like Humana (NYSE:HUM) and Monsanto (NYSE:MON).
- Also added to the index: TMO, GM, FB, CBS, GOOG, MAS, APD, DAL, NOV, WHR, THC, ABBV.
- Dropped from the index: AIG, MCK, CTSH, MSI, RIG, CI, APC, GPS, MSFT, CMCSA, NFLX, MHFI, WMB, ICE.
- Outlying sectors: Consumer Discretionary (NYSEARCA:XLY) makes up 23.33% of the iBillionaire Index vs. 11.68% for the S&P 500, and Industrials (NYSEARCA:XLI) and financials (NYSEARCA:XLF) make up just 6.67% each of the index vs. 10.44 and 16.30 of the S&P 500, respectively. Consumer Staples (NYSEARCA:XLP) have zero representation in the index vs. 9.7% in the S&P 500.
- Previously: Direxion launched an ETF with iBillionaire today
Nov. 18, 2014, 2:05 PM
- Continuing its efforts to build (in Mark Zuckerberg's words) "a pipeline of experiences" on mobile, Facebook (FB +0.3%) has created standalone Android/iOS apps for monitoring and interacting with one's groups.
- Group-related notifications are provided through the app, as is a Discover tab that recommends groups based on a user's interests. However, unlike with messaging, Facebook won't be removing Groups functionality from its core apps.
- The Groups launch follows the October release of Rooms, an app that allows users to create discussion spaces while logging in with pseudonyms.
- Separately, Hilliard Lyons' Stephen Turner has launched coverage on Facebook with a Buy rating and $92 target. Like others, Turner cites Facebook's ability to benefit from a shift in ad spend towards online/mobile channels - mobile still only accounts for 11% of U.S. ad spend vs. 25% of media time.
Nov. 17, 2014, 11:09 AM
- LinkedIn (LNKD -4%) is seeing profit-taking after the FT reported Facebook (FB -0.7%) is planning to launch a business-focused version of its core service that will support separate work accounts and feature collaboration tools. Enterprise social networking software vendor Jive (JIVE -5.9%) is also selling of.
- Salesforce (CRM -1.5%), whose Chatter business social networking platform has seen strong growth, is off moderately. The Nasdaq is down 0.4%.
- Facebook's service will be able to lean on the company's 1.35B-strong active user base, as well as its very high Web and mobile app engagement rates (much higher than LinkedIn's).
- At the same time, the offering will have to contend with corporate wariness towards Facebook (due to Facebook's historical consumer focus and reputation as a productivity-killer), as well as LinkedIn's established base of professional accounts (332M at the end of Q3) and the popularity of business social networking tools from the likes of Jive, Salesforce, Microsoft, and IBM.
Nov. 17, 2014, 2:09 AM
- Facebook (NASDAQ:FB) is developing a new website called "Facebook at Work" that will allow users to keep their personal profile separate from their work profile, FT reports.
- The new site will look very much like Facebook, with a newsfeed and groups, and will allow users to chat with colleagues, connect with professional contacts and collaborate over documents - a clear threat to rival LinkedIn (NYSE:LNKD).
Nov. 13, 2014, 3:10 PM
- The revised text includes passages noting Facebook's use of location data to provide business recommendations and other content, as well as its collection of transactional data. Facebook also notes users can opt out of receiving ads that are based on non-Facebook activity.
- Re/code's Peter Kafka observes Facebook's revisions pave the way for new payments/e-commerce services, as well as location-based ads. Facebook has already been testing a Buy button that allows users to complete purchases on its site/apps, and has signaled payments will be a major part of its efforts to monetize Messenger.
Nov. 10, 2014, 1:37 PM
- Less than seven months after Mark Zuckerberg disclosed Facebook Messenger (FB -0.6%) had 200M monthly active users, Facebook states Messenger has topped 500M.
- The massive growth, of course, was driven by Facebook's decision to remove messaging functionality from its core apps, thereby forcing users to download the standalone Messenger apps. A backlash ensued; the latest version of the iOS app still has a rating of only 1.5/5 stars in the App Store due to users upset about the new requirement (its cumulative rating is 3/5 stars).
- Nonetheless, the requirement has led Messenger's MAU count to soar past that of all other mobile messaging platforms save for Facebook-owned WhatsApp (has over 600M), and grow to equal nearly 40% of Facebook's Q3-ending MAU base of 1.35B.
- Facebook put ex-PayPal chief David Marcus in charge of Messenger in June, and has suggested it plans to monetize the platform via payments.
Nov. 8, 2014, 10:12 AM
- "There's this inherent conflict ... Are we trying to optimize news feed to give each person, all of you guys, the best experience when you’re reading? Or are we trying to help businesses just reach as many people as possible? And in every decision that we make, we optimize for the first," says Mark Zuckerberg (NASDAQ:FB) addressing concerns from businesses that their Facebook organic reach (i.e. their ability to reach followers without paying for ads) is steadily declining.
- Zuck observes the average Facebook user is eligible to see ~1,500 news feed updates per day, but only ends up seeing ~100 - Facebook's algorithms are largely responsible for picking out which ones are seen. As users add more "friends" and follow more pages, their eligible content grows, and their odds of seeing a particular post declines.
- The upshot? Businesses increasingly need to buy Facebook ads in order to keep the rate at which their content is seen from declining. And since the number of posts viewed per user (ads or otherwise) is staying fairly constant, growing ad demand serves to boost ad prices.
- Zuck's remarks come as Facebook updates its news feed controls to make it easier for users to unfollow users, pages, and groups, and gives them the option to see less of particular users/pages/groups without unfollowing them. Affected businesses will, of course, end up with less organic exposure.
Oct. 30, 2014, 3:54 PM
- Following 6 months of testing, Instagram (FB -2.4%) has begun showing autoplay video ads to its 200M+ active users. Disney, Activision, and Banana Republic are among the first buyers. Brands are able to target based on age, gender, and country.
- As with its photo ads, Instagram is reviewing all material to make sure it doesn't (in Instagram's view) damage the user experience. Facebook has been cautious with its news feed video ads as well, and has said it doesn't expect huge 2014 sales.
- Instagram announced a $100M deal with ad giant Omnicom in March. A $500M May deal between Facebook and Omnicom rival Publicis covered both news feed and Instagram ads. Observers have noted Instagram's maximum video length (15 seconds) matches with the length of shorter TV ads.
Oct. 29, 2014, 5:23 PM
- Facebook's (NASDAQ:FB) shelf registration paves the way for the company to sell stock, debt, or warrants through future offerings, should it wish to.
- The filing comes a day after Facebook guided for its non-GAAP costs/expenses to rise 50%-70% in 2015.
- The social networking giant had $14.25B in cash/marketable securities at the end of Q3, and produced $2.56B in free cash flow over the first 9 months of 2014.
- FB -0.5% AH; shares fell 6.1% in regular trading.
Facebook, Inc. is a social networking service and website. Its website allows people to communicate with their family, friends, and coworkers. The company offers advertisers a combination of reach, relevance, social context, and engagement to enhance the value of their ads. Its services include... More
Industry: Internet Information Providers
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