Facebook: The Social Standard - Initiating Coverage With A $155 Price Target
Altum Research • 97 Comments
Altum Research • 97 Comments
Feb. 7, 2015, 2:12 PM
- Facebook (NASDAQ:FB) has bought a 56-acre, 21-building, industrial park just to the south of its Menlo Park, CA HQ from Prologis (NYSE:PLD). "Industry sources" talking with The Silicon Valley Business Journal estimate the complex is worth around $400M. (PR)
- The park could be revamped to include mixed-use housing, retail, and a hotel, in addition to Facebook offices. Its purchase comes as Facebook gets set to begin using an expansion of its existing campus designed by famed architect Frank Gehry.
- Facebook has made no secret of its plans to spend and hire aggressively. The company guided last week for 50%-65% non-GAAP 2015 spending growth (55%-70% GAAP), and set a 2015 capex budget of $2.7B-$3.2B. Headcount rose 45% last year to 9,200.
Jan. 28, 2015, 7:00 PM
- After guiding for 50%-70% non-GAAP 2015 spending growth in October, Facebook (NASDAQ:FB) has lowered its range to 50%-65% (still above a 37% revenue growth consensus). GAAP guidance is at 55%-70%. The 2015 capex budget has been set at $2.7B-$3.2B (17% of the revenue consensus at the midpoint). Headcount rose by 45% in 2014 to 9,200. (live blogs: WSJ, BI)
- Sheryl Sandberg states Facebook, which autoplays videos as users scroll down their news feeds (audio playback requires user interaction), now sees 3B daily video views from uploaded content, and that over half of all U.S. daily users see at least one video.
- She reiterates Facebook is still in the early stages of monetizing its video traffic, as well as Instagram. New ad measurement/relevance tools will roll out to advertisers this year.
- CFO Dave Wehner notes forex is expected to have a 5% impact on 2015 revenue growth. International markets were 52% of Q4 revenue, with Europe at 27%.
- Mark Zuckerberg states Facebook has indexed a trillion posts for search, and is just beginning to build out effective search tools for combing this material. The company is a month removed from overhauling its search engine and dumping Bing.
- Other details: 1) Though PC traffic was down due to the mobile shift, PC ad sales rose 1%. 2) Game-related payments revenue fell 10%, even as total payments/fees revenue grew 7%. 3) Zuck states average daily time spent per user is up 10% Y/Y, and that 2B+ photos are now shared daily on Facebook. 4) ARPU rose to $2.81 from $2.14 a year ago. North American ARPU was $9.00.
- FB -1.7% AH. Q4 results, details, earnings slides (.pdf)
Jan. 28, 2015, 4:23 PM
- Facebook's (NASDAQ:FB) ad revenue rose 53% Y/Y in Q4 to $3.59B; growth was 64% in Q3. Payments/other fees revenue rose 7% to $257M, after growing 13% in Q3.
- Mobile was 69% of ad revenue vs. 66% in Q3 and 62% in Q2. Ad growth would've been 58% if not for forex.
- Monthly active users (MAUs) rose 3% Q/Q and 13% Y/Y to 1.39B, and mobile MAUs 6% Q/Q and 26% Y/Y to 1.19B. Daily active users (890M) were 64% of MAUs, even with Q3.
- Non-GAAP costs/expenses rose 50% Y/Y to $1.63B, nearly even with revenue growth of 49%. Non-GAAP op. margin was an eye-popping 58%. On a GAAP basis, costs/expenses were up 87% to $2.72B.
- Full-year free cash flow was $3.63B, soundly exceeding net income of $2.94B. Facebook ended Q4 with $11.2B in cash/marketable securities, and no debt.
- FB nearly unchanged AH for now. Q4 results, PR.
Jan. 28, 2015, 4:02 PM
- Facebook (NASDAQ:FB): Q4 EPS of $0.54 beats by $0.06.
- Revenue of $3.85B (+49.2% Y/Y) beats by $80M.
- Shares -2.63%.
Jan. 27, 2015, 5:35 PM| Jan. 27, 2015, 5:35 PM | 4 Comments
Jan. 15, 2015, 3:20 AM
- Facebook (NASDAQ:FB) launched its free Internet.org application in Colombia on Wednesday as part of a drive to bring developing markets online -- but CEO Mark Zuckerberg offered no clues to Reuters about when or whether the company would enter China: "Who knows ... that's very different."
- The mobile app -- made in partnership with local mobile phone provider Tigo and aimed at low-income and rural users -- offers more than a dozen tools via the Android OS.
- The total population in Colombia was 47 million people in 2014, of which 25% were living in rural areas.
Jan. 14, 2015, 10:17 AM
- Facebook at Work, first reported on by the FT in November, has been made available via app stores to select enterprise test partners. The platform looks a lot like standard Facebook (FB +0.4%) - it contains a news feed, messaging tools, and groups - and lets users log in with their regular Facebook accounts. But a user's professional data is completely split off from his/her personal data, and Facebook won't collect any of it.
- Moreover, unlike LinkedIn (LNKD +0.1%), Facebook at Work is only focused (for now) on connecting with co-workers, thus arguably making it more of a rival to Jive Software (JIVE -0.3%), Salesforce's Chatter platform, and Microsoft's Yammer. LinkedIn and Jive both sold off following the November FT report.
- With no ads being sold, corporate subscriptions are a potential revenue stream. Facebook can count on its giant, highly engaged user base to drive interest in Work. At the same time, it has to contend with corporate wariness towards Facebook, historically viewed by many of them as a productivity-killer.
- Separately, Oppenheimer and Credit Suisse have respectively hiked their Facebook targets to $100 and $102. Oppenheimer expects a strong Q4 report on Jan. 28. "Checks suggest 4Q pricing +14% q/q and +21% y/y, with same-client spending +32% q/q and 33% y/y ... Organic reach is becoming more difficult, due to competition for newsfeed impressions ... We also see upside from increased video adoption."
- Credit Suisse cites the potential of Facebook's mobile ad network, and argues "Street models are too conservative and underestimate the long-term monetization potential of upcoming new products."
Jan. 6, 2015, 7:14 PM
- Five months after announcing WhatsApp (NASDAQ:FB) had surpassed 600M monthly active users (MAUs), co-founder/CEO Jan Koum states the mobile messaging giant has topped 700M. With WhatsApp having only needed four months to go from 500M to 600M, its growth rate appears to have slowed a bit.
- Koum adds WhatsApp users now send over 30B messages daily. That's up from 19B at the time of the Facebook deal 11 months ago.
- Facebook had 1.35B MAUs at the end of Q3, shortly before the WhatsApp deal was closed. Instagram topped 300M MAUs in December, and Facebook Messenger passed 500M in November.
- While selling him on the acquisition, Mark Zuckerberg reportedly told Koum he wants WhatsApp to be "bigger than [Facebook] in number of users," and that its service covers "a much more common-use case." Facebook has promised WhatsApp will remain ad-free.
Jan. 5, 2015, 5:58 PM
- Facebook (NASDAQ:FB) has bought Wit.ai, creator of a voice recognition tech platform that breaks down voice commands into structured information (a user's intent, dates and places mentioned, etc.). Terms are undisclosed.
- Wit.ai claims its platform is used by over 6,000 developers, and is "already powering hundreds of apps and devices." TechCrunch speculates Facebook could use Wit.ai to "build voice control into its development platform, aid with voice-to-text input for Messenger, improve Facebook’s understanding of the semantic meaning of voice, and create a Facebook app you can navigate with your voice." Oculus is another possibility.
- Facebook, which has already given 3rd-party developers plenty of free tools with the goal of keeping them actively supporting its platform (and perhaps its ad products?), plans to keep Wit.ai's platform freely available.
- Like other tech giants, Facebook has shown a keen interest in natural language-processing for some time.
Jan. 5, 2015, 10:48 AM
- BofA/Merrill's Justin Post: "We continue to be constructive on Facebook's (FB +0.2%) strong engagement (64% of users access daily), usage share gains, multi-app mobile position and monetization opportunity, and see several levers to help drive incremental revenue growth in 2015-2016."
- His target has been hiked by $3 to $91, or 32x 2015E EPS after adding $10/share to account for cash and WhatsApp's value. Post's 2016 EPS estimate of $2.90 is far above a 2015 consensus of $1.91.
- Facebook is slightly higher on a day the Nasdaq is down 1%, and the S&P 1.4%. Shares remain within $4 of an all-time high of $82.17.
- Evercore spoke highly of Facebook's mobile engagement trends last month, citing November comScore data.
- Update (3:15PM ET): Facebook is now down 1.7%. The Nasdaq is down 1.5%.
Jan. 2, 2015, 12:08 PM
- "Safety used to mean gold, US treasuries, and blue chip stocks. Now it means Google, Apple, Amazon, and Facebook," says high-profile VC Fred Wilson while offering his 2015 predictions. Though believing rising interest rates and low oil prices will trigger "a noticeable flight to safety," he sees major tech firms continuing to have easy access to capital.
- On the other hand, Wilson is cautious on the near-term outlook for the budding wearables market (John Legere feels differently). "Apple Watch will not be the homerun product that iPod, iPhone, and iPad have been. Not everyone will want to wear a computer on their wrist. Eventually, this market will be realized as the personal mesh/personal cloud, but the focus on wearables will be a bit of a headfake..."
- He also expects virtual reality to "hit some headwinds" after getting hyped in 2014 following the Facebook/Oculus (NASDAQ:FB) deal. "Oculus will struggle to ship their consumer version and competitive products will underwhelm. The virtual reality will eventually catch up to the virtual hype, but not in 2015."
- He forecasts cybersecurity budgets "will explode in 2015 as every company, institution, and government attempts to avoid being Sony’d." But Wilson also thinks "the hacks will continue because on the open internet there is no such thing as an impenetrable system." Cybersecurity plays: FEYE, PANW, FTNT, IMPV, QLYS, PFPT.
- Wilson, a long-time Bitcoin (COIN, OTCQB:BTCS) believer, once more defends the cryptocurrency. "The horrible year that bitcoin had in 2014 will be a wakeup call for all stakeholders. Developers will turn their energy from creating the next bitcoin (all the alt stuff) to creating the stack on top of the bitcoin blockchain. Real decentralized applications will start to emerge..."
- Tech ETFs: QQQ, XLK, PSQ, TQQQ, QID, VGT, SQQQ, QLD, TECL, IYW, ROM, FTEC, TECS, RYT, QQEW, QTEC, IGM, QQQE, FXL, MTK, REW, QQXT
Dec. 24, 2014, 9:09 AM
- Facebook (NASDAQ:FB) signs a deal with the NFL for the rights to video clips.
- The league has been tight with access to game highlights in the past, even precluding some broadcast partners from streaming game video clips to mobile devices.
- The video highlights on Facebook will be followed by advertisements from Verizon (NYSE:VZ).
- The initiative starts next week just in time for the start of the NFL playoff season.
- What to watch: The high-profile deal could send a chill through the C-suites of broadcasters due to the NFL's strong ties to Madison Avenue ad agencies.
Dec. 22, 2014, 10:47 AM
- Facebook (FB +2.4%) has surpassed its Oct. 28 all-time high of $81.16, made shortly before the company sold off in response to the conservative Q4 guidance and aggressive 2015 spending forecast provided with its Q3 beat.
- Shares are up 49% YTD vs. a 14% gain for the Nasdaq. They now go for 43x 2015E EPS and 13x 2015E sales.
- Last Friday: Citi values Instagram at $35B
Dec. 19, 2014, 11:36 AM
- Bought for ~$1B by Facebook (FB +1.8%) in 2012, Citi thinks Instagram is now worth 35x as much, and even calls this estimate "conservative."
- Citi: "While Instagram is still early in monetizing its audience and data assets, and its financial contribution to [Facebook] is minimal today, we believe that it is quickly gaining monetization traction, and would contribute more than $2bn in high-margin revenue at current user and engagement levels if fully monetized."
- For reference, Twitter is worth a relatively modest $23.7B. In Twitter's favor: The company is much further along in monetizing its platform, and arguably has more valuable datasets to leverage. In Instagram's favor: Its MAUs just passed Twitter's (the gap will likely widen going forward), and its photo/video streams lend themselves well to brand advertising.
- Facebook is once more trading near $80. Its all-time high is $81.16.
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.
Facebook, Inc. is a social networking company, which 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 timeline, news... More
Industry: Internet Information Providers
Country: United States