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Pre-Market Most Active for Dec 24, 2014 : RIG, GPRO, SNN, ARCP, FB, SMFG, ACHN, BAC, FCAU, TVIX, CRH, GILDat Nasdaq.com (Wed, 8:39AM)
- If an investor wants to invest in companies that benefit from a shift of advertising dollars to the online space, the two big choices are obvious: Google and Facebook.
- How profitable will future countries be that are not yet online? Why is every ad in the world not online already? Why is there still a print business at all?
- Forecasts are notoriously bad at predicting the future, so the only thing we can do as investors is buy future cash flows as cheaply as possible.
Might Facebook's Oculus Be Going After Google Glass?
- Facebook-owned Oculus VR recently acquired two start-up companies with virtual-reality related technologies.
- One of them, 13th Lab, developed technology for creating 3D models of the world as a camera moves around.
- 13th Lab also developed SLAM technology, which can track a camera's location as it moves around.
- With SLAM, Oculus has the option to shift their focus and enter the smart eyeglasses market currently dominated by Google Glass.
Facebook Is An Economic Castle Protected By An Unbreachable Moat
- Facebook's strong self-reinforcing network effect has allowed it to become the world’s largest and most profitable social media company.
- The rapidly-rising Internet user base, which has more than tripled over the past decade, will be a major long-term growth driver.
- The company is experiencing robust ARPU growth as a result of higher user engagement, a trend that should continue in the coming years.
- As more and more ad dollars flow online, Facebook will continue to gain a disproportionate share of this shift in advertising budgets.
- Facebook shares offer an attractive risk/reward opportunity with double-digit upside potential over the next 12 to 18 months.
- A new survey shows that teens are losing interest in Facebook.
- The news is tempered a little by the fact that the majority of users who are leaving are ending up on Instagram and Whatsapp.
- Instagram and WhatsApp's monetization are largely undeveloped, which means there is plenty to be happy about for the future.
- Facebook has been hit, with falling engagement trends for the core application.
- Mobile is a major culprit.
- However, Facebook offsets this with Instagram, which is a product aimed at mobile devices.
- Assuming Instagram can monetize users at an $8 ARPU, revenue from this segment may exceed $2.4 billion.
- Facebook currently has a P/E ratio of 75, which is fertile soil for significant P/E compression over the long term.
- The company increasingly relies on mobile revenue, which is harder to monetize.
- A realistic worst-case scenario where Facebook grows at 10% annually, but sees its P/E ratio dip below 20 would lead to a 35% investment loss over ten years.
I Am Reducing Facebook To Just 3% Of My 2015 Portfolio
- Small investors should try reducing their bets on momentum stocks like Facebook.
- Facebook has not shown real evidence it will imitate LinkedIn’s China strategy.
- Facebook's great 2014 momentum run cannot sustain itself for long without China.
Facebook's Resilience Is An Important Reason To Own It Here
- Facebook's shares have held ground through December's swoon as the Nasdaq and Apple have fallen significantly.
- We now know where true support is for Facebook shares, so I view it as a safe bet for rattled investors here.
- On a valuation basis, I continue to be astounded by what I see as a conservative estimate for at least 36% average annual appreciation in FB over the long term.
Will Millennials Eventually Grow Into Facebook Users?
- In my prior article, SA readers asked, do teenage Snapchat users become Facebook users as they become adults?
- Yes, because Facebook becomes a personal blog, and gives users the ability to stay connected with people across broader demographics.
- These features are vastly more important to an 18+ demographic, and cannot be replicated by Snapchat, as its features are targeted at younger users.
- Instagram has surpassed 300 million monthly active users.
- Efforts to monetize the mobile app supports Facebook's earnings and revenue growth going forward.
- The company is relatively well-diversified, as it's not dependent on any single mobile application.
- Facebook's growth prospects, trends in profitability and competitive dynamics support my buy thesis on the stock.
- Facebook has lost the teenage demographic as many young users spend time on Snapchat or Instagram.
- Snapchat has a more functional user interface when interacting with content that's presented in a blog reel.
- This puts Facebook in a questionable position as the core design of the news feed doesn't appeal to a key sub segment of users.
- The vast majority of the internet population are still on Facebook, so it's not like the loss of a core demographic hurts Facebook's financial prospects by much.
- Facebook remains a strong investment, but developments in this space need to be watched closely.
Instagram Beats Twitter With 300 Million Active Users
China Reaches Out To Facebook In Growing Courtship
- LinkedIn shares continue to look attractive despite their high P/E ratio.
- LinkedIn is well positioned to benefit from achieving pricing power with its members.
- Facebook stock performance is expected to lag LinkedIn's performance.
- Facebook has developed methods to keep capital costs down.
- This translates into improved profitability.
- Facebook's management team also has other cost levers to meet quarterly earnings targets.
- For those reasons, the long-term growth rate looks relatively attainable.
- Turning Virtual Reality into Virtual Profits.
- Most investors still don’t understand what Facebook’s new product even is, and therefore have no idea of what the promise or the potential are.
- Every market that will generate income, previously existed, but will now be expanded and tapped with an iTunes efficiency.
- This article is an introduction and primer on the possibilities.
- Focusing on advertising metrics such as CPCs (cost per clicks) and CTRs (click-through rates) doesn't tell investors a lot about relative performance of the Internet giants.
- Google's CPCs have tanked, while Facebook's are increasing steadily. This doesn't indicate that Facebook is winning. It simply reflects differences in mobile maturity. Expect CPCs to stabilize for both.
- CTRs, on the other hand, are rising across the board. Clumsy fingers on mobile devices are driving this, and these are likely to stay elevated.
- Revenues will follow eyeballs in digital advertising. Pricing and CTRs are interesting footnotes, but aren't the driving force of either Google's or Facebook's revenue growth.
Yesterday, 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.
Mon, Dec. 22, 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
Fri, Dec. 19, 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.
Tue, Dec. 16, 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
Sat, Dec. 13, 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.
Thu, Dec. 11, 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.
Wed, Dec. 10, 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
Mon, Dec. 8, 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.
Fri, Dec. 5, 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.
Wed, Nov. 26, 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.
Tue, Nov. 25, 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
Tue, Nov. 18, 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.
Mon, Nov. 17, 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.
Mon, Nov. 17, 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).
Thu, Nov. 13, 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.
Mon, Nov. 10, 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.
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