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FB vs. ETF Alternatives
Friday, Mar 72:40 PM
Friday, Mar 72:40 PM| 8 Comments
- AdAge reports Instagram (FB -1.5%), which only began showing ads last fall, has scored a year-long commitment from top ad agency Omnicom (OMC -0.1%) to spend up to $100M. The magazine also reports Instagram is talking with Starcom MediaVest, another leading agency.
- Instagram has confirmed the tie-up, but not its specifics. "Our teams are going to work hand in hand to develop and execute campaigns that provide people with amazing imagery."
- The mobile photo-sharing platform has been cautious with its efforts to monetize its ~180M MAUs. Select brands and their agency partners are currently able to buy photo/video-based ads that appear in a user's stream, but the ads have to meet Instagram's stringent quality standards.
- Previous: Instagram chief focused on discovery, international growth, ecosystem
Wednesday, Mar 57:18 PM
Wednesday, Mar 57:18 PM| 24 Comments
- "One day I want you to become bigger than us in number of users ... What you guys do is a much more common-use case," Mark Zuckerberg (FB +4%) told WhatsApp CEO Jan Koum as they hammered out Facebook's $19B acquisition of the mobile messaging leader, according to a Forbes cover story.
- The talks reportedly started after Facebook exec Amin Zoufonoun learned Koum was meeting Google's Larry Page - Google has denied bidding for WhatsApp, and Koum says he got no sign Page was interested in doing so. Zuck initially "offered a range of $15 billion and higher;" Koum pushed for $20B.
- Forbes also makes note of WhatsApp focus on speed and simplicity. The company relies on the messaging-centric Erlang programming language and open-source FreeBSD OS, considers features such as stickers and in-app games (embraced by rivals) "junk," and for now is only charging in markets where mobile payments/billing are simple and mature.
- Om Malik obseres WhatsApp has been successful striking deals with carriers for service plans that provide access to WhatsApp but no other data services, and that Facebook, contending with a slew of apps that collectively "unbundle" its core services, has been trying to reach similar deals.
- Earlier: Facebook rallies on Stifel PT hike
Wednesday, Mar 511:24 AM
Wednesday, Mar 511:24 AM| 38 Comments
- Stifel's Jordan Rohan has upped his Facebook (FB +3.5%) PT to $82 from $72, while reiterating a Buy. Shares are close to their all-time high of $71.44.
- Rohan is upbeat about Facebook's ability to continue growing its ad spend share, and says checks suggest "marketers view Facebook as a strategic communications platform, capable of establishing and reinforcing relationships with consumers."
- At the same time, he admits to finding the $19B valuation Facebook assigned to WhatsApp "perplexing."
- Rohan upgraded Facebook to Buy last June, six weeks before the company's blowout Q2 report. His PT at the time was $29.
Tuesday, Mar 49:20 AM
Tuesday, Mar 49:20 AM| 38 Comments
- 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.
Wednesday, Feb 261:25 PM
Wednesday, Feb 261:25 PM| 15 Comments
- Media reports that Google (GOOG +0.5%) made an offer to buy WhatsApp are "simply untrue," says Android/Chrome chief Sundar Pichai. Fortune had reported Google offered $10B for the mobile messaging leader, and others suggested Google was even willing to top Facebook's (FB +0.7%) $19B offer.
- Pichai's remarks come shortly after Mark Zuckerberg met with top mobile carrier execs, including Vodafone (VOD -1.3%) CEO Vittorio Colao and Orange (ORAN -3.6%) CEO Stephane Richard, to address concerns carriers are being reduced to "dumb pipes" as services such as Facebook and WhatsApp proliferate, and in doing so eat into voice/SMS revenue.
- Zuck is looking to enlist carriers such as Vodafone and Orange in its Internet.org initiative to provide free access to basic Web services in emerging markets. Colao recently said offering free Facebook access to Vodafone subs "does not make any sense" for the carrier.
- Meanwhile, WhatsApp rival Telegram has rocketed to the top of App Store charts in many countries since the Facebook deal went down, and WhatsApp saw a weekend outage. Telegram claims to offer better security than alternatives, and also features a Snapchat-like self-delete option for message threads.
- Though no WhatsApp rivals come close to matching the service's 465M MAUs and network effect, Telegram's growth highlights how rivals can quickly gain a following by leveraging phone contact book listings to connect users.
Monday, Feb 241:35 PM
Monday, Feb 241:35 PM| 12 Comments
- Less than a week after selling off on news of a certain high-profile acquisition, Facebook (FB +4.1%) has shot above $71 for the first time. Helping its cause: Needham's Laura Martin has upped her PT to $80 from $65, while arguing the WhatsApp deal isn't as expensive as it might first seem.
- Though Facebook agree to pay $45 per WhatsApp MAU, Martin thinks that figure will drop to $23/MAU within a year, given WhatsApp's growth trajectory. She also notes Facebook ($140/MAU) and Twitter ($180/MAU) have much higher per-MAU valuations (ed: unlike WhatsApp, both platforms are also monetized via ads rather than subscriptions), and that WhatsApp averages 14 sessions/user in some markets.
- The gains come as Mark Zuckerberg talks shop at the Mobile World Congress. Zuck trumpets Facebook's Internet.org initiative to provide free Web access in emerging markets - Facebook is looking for 3-5 mobile carrier partners, and doesn't expect the effort to be profitable for a while - and suggests WhatsApp will be Facebook's last big acquisition for some time.
- Meanwhile, WhatsApp CEO Jan Koum says his company's apps will support voice calling starting in Q2. A number of rivals, including Line, KakaoTalk, and (naturally) Skype, already support voice calls.
- Koum also says WhatsApp now has 465M MAUs - up from the 450M Facebook said it had last week - and 330M DAUs. His remarks follow a weekend outage that led WhatsApp's App Store download rankings to plunge (for now) in some markets, and those of rivals to surge.
Sunday, Feb 233:06 AM
Sunday, Feb 233:06 AM| 13 Comments
- WhatsApp went down for over three hours yesterday just days after it agreed to sell itself to Facebook (FB) for $19B.
- The service has been restored and appears to be working fine.
- Meanwhile, WhatsApp and other mobile-messaging services have cost phone carriers an estimated $32.5B in lost revenue from texting fees.
- WhatsApp's messages are sent via the Internet and are free once the application has been downloaded and a data plan has been paid for, while traditional text messages are sent via the cellular network.
- Separately, the WSJ profiles the role of former Google employee Neeraj Arora in WhatsApp's negotiations with Facebook. Arora is WhatsApp's one and only marketing manager, human-resources head, publicist, and business-development chief.
Thursday, Feb 207:50 AM
Thursday, Feb 207:50 AM| 14 Comments
- Unsurprisingly, the sell-side leans negative on the deal, but the Jefferies team says the purchase reminds it of Google's 2006 acquisition of YouTube "where valuation is based on longer-term monetization potential of a disruptive asset." Facebook (FB) remains a Buy at Jefferies with $80 price target.
- "To justify $19B, WhatsApp would need to generate around $1B in annual cash flow by our model's terminal year of 2018," says Pivotal Research. "However, few data-points to support such an assumption were provided by the company, as evidently few are available." The team downgrades to Hold from Buy.
- Facebook is paying about $42 per WhatsApp user even though said user generates $0.99 per year in revenues, "suggesting a decades-long payback under WhatsApp's current business model, should new user growth slow," writes Evercore's Ken Sena, cutting the stock to Equal Weight with price target lowered $10 to $60. He notes Viber, an alternative to WhatsApp with roughly two-thirds the scale and comparable growth, recently sold to Rakuten for $900M. Sena and team also have separate concerns about engagement in the 18-24 year old demo.
- Bernstein's Carlos Kirjner: "[The deal]" suggests limitations on how far the business can be extended beyond facebook.com."
- Facebook is off 3.6% premarket
- Previous coverage
Wednesday, Feb 197:02 PM
Wednesday, Feb 197:02 PM| 24 Comments
- WhatsApp is the only app with better engagement and a greater proportion of daily users than Facebook (FB), says Mark Zuckerberg on a CC discussing Facebook's reasons for spending up to $19B to buy the messaging upstart..
- Zuck also praised WhatsApp's engineering team for creating a service with unmatched speed and reliability. VC backer Jim Goetz echoes that sentiment, and notes WhatsApp has only one developer for every 14M active users.
- Both Zuck and WhatsApp CEO Jan Koum insist the service won't feature ads, and the latter says monetization isn't a near-term priority. Many see the deal as being less about monetization than about (expensively) heading off an emerging threat.
- Zuck also argues WhatsApp and Facebook Messenger serve different purposes - the former acts as an SMS replacement, the latter as a way to have IM-like chats with friends.
- Facebook's presentation slides (.pdf) note WhatsApp's daily traffic includes 19B messages (approaching global SMS levels), 600M+ photos, and 100M+ video messages, and that these figures are all up over 100% Y/Y.
- Nonetheless, plenty of jaws have dropped over the deal's price tag. WhatsApp is being assigned a valuation higher than that of 235 S&P 500 components.
- FB -2.9% AH. Previous: Facebook buying WhatsApp, details.
Wednesday, Feb 195:26 PM
Wednesday, Feb 195:26 PM| 24 Comments
- Facebook (FB) is paying $4B in cash and issuing $12B in stock (183.9M shares) for WhatsApp. The company is also issuing $3B worth of restricted stock units that vest over four years, leading to a total potential acquisition price of $19B. For reference, Facebook's market cap is currently at $165B.
- Facebook states WhatsApp now has 450M MAUs, 70% of whom are active on a given day, and that its messaging traffic is approaching global SMS volumes. Mark Zuckerberg declares the startup, which relies on a phone's contact book to connect users with each other, is "on a path to connect 1 billion people."
- Much like Instagram, WhatsApp will maintain a measure of independence from Facebook. Co-founder/CEO Jan Koum will join Facebook's board.
- WhatsApp only employed 50 people as of January. The startup has taken a cautious approach to monetizing its service (no ads for now), though it does charge users $0.99/year after providing a year of service for free.
- The deal comes with a hefty $2B termination fee ($1B apiece in cash and stock). CC at 6PM ET. FB now -4.5% AH.
- Previous: Facebook buying WhatsApp
Wednesday, Feb 195:06 PM
Wednesday, Feb 195:06 PM| 124 Comments
- Facebook (FB) is acquiring mobile messaging leader WhatsApp for a whopping $16B in cash and stock.
- WhatsApp, long seen as an indirect threat to Facebook's mobile engagement rates, had 430M monthly active users as of last month. Facebook, by comparison, ended Q4 with 1.23B MAUs and 945M mobile MAUs.
- FB -3.7% AH.
- Update: Facebook states in the PR the deal will also include $3B worth of restricted stock units that vest over four years, leading to a total potential payout of $19B.
Friday, Feb 72:40 PM
Friday, Feb 72:40 PM| 20 Comments
- Down 24% yesterday due to the disappointing engagement/user growth metrics provided in its Q4 report, Twitter (TWTR +8.9%) is recouping a portion of its losses today. With 32.7M shares shorted as of Jan. 15, it's likely many shorts are taking profits.
- Meanwhile, Facebook (FB +2.9%) is again surging to new highs even as LinkedIn sells off due to weak guidance. Shares are up 20% since the company posted a big Q4 beat.
- Though reiterating a Sell on Twitter, Pivotal Research's Brian Wieser suggests Twitter is misunderstood by those making direct Facebook comparisons (previous), and that the former is to the latter as radio is to TV.
- Twitter is "a marketing vehicle capable of satisfying different kinds of marketing goals," writes Wieser. Whereas Facebook provides a better environment for marketers to form relationships with consumers and engage in "immersive brand-building," Twitter provides immediacy, a greater proportion of out-of-home mobile activity, and "a greater capacity for in-your-face messaging."
- He still considers Twitter overvalued, but believes its Q4 numbers show it's proving quite successful at gaining traction with a variety of marketers.
Wednesday, Feb 56:13 PM
Wednesday, Feb 56:13 PM| 11 Comments
- Facebook (FB) is down 2.3% AH, and LinkedIn (LNKD) is down 1.6%, after Twitter and Pandora provided disappointing Q4 reports. In addition, Twitter shareholder GSV Capital (GSVC) is down 6.7%.
- Richly-valued Twitter beat Q4 estimates and provided above-consensus revenue guidance. But it also reported a 7% Q/Q drop in Timeline views and slowing monthly active user growth. Pandora beat Q4 EPS estimates, but only reported in-line revenue and issued below-consensus guidance.
- LinkedIn reports after the close tomorrow.
Thursday, Jan 3011:57 AM
Thursday, Jan 3011:57 AM| 2 Comments
- With its shares soaring above $60 following a big Q4 beat, Facebook (FB +16%) has announced it's launching Paper, its rumored mobile reader app.
- Like Flipboard (the market's leader), LinkedIn's Pulse, and Google Currents, Paper allows users to browse articles (split up into topics) and social media updates via horizontal swiping, and features an image-heavy UI. But it (naturally) places a much bigger emphasis on Facebook browsing, and also offers advanced tools for uploading content.
- The Verge: "[Paper is] much more than just a news-reading app — it's a complete reimagining of Facebook itself. Once you've used it, you may never want to open the standard Facebook app again."
- Product design lead Mike Matas ambitiously hopes the app, part of a broader push by Facebook to launch new standalone apps to grow its mobile engagement, will result in better content being uploaded. "As you start changing the way you’re displaying this content, we hope that it will change the way people think about posting content."
- Meanwhile a BloombergBusinessweek cover story about Facebook's 10th anniversary mentions the company will (like Twitter and Instagram) soon allow users of certain apps to log in anonymously.
- Such a move comes amid concerns Facebook's insistence on real names, along with a focus on private sharing with friends/family, has led to waning interest among teens and certain other demographics.
- More on Facebook
Thursday, Jan 309:10 AM|Thursday, Jan 309:10 AM| 1 Comment
Thursday, Jan 308:12 AM
Thursday, Jan 308:12 AM| 6 Comments
- Facebook (FB) is now sporting a 17.6% premarket gain to a new all-time high of $62.92, with the entire Street rushing to hike price targets.
- Left out of the fun is BMO Capital's Dan Salmon, reiterating his Market Perform while lifting the PT to $60 from $50.
- "FB's ad pricing power also came through in Q4. In all, average price per ad rose by 92% YoY, a 3,900bp sequential acceleration on a 2-year stacked basis," says Susquehanna's Brian Nowak, reiterating his Positive rating and boosting the PT to $72 from $68.
- "With two meaningful, clearly identifiable catalysts in Instagram and video ads, we reiterate Buy and raise our PT to $80," says Jefferies.
- "At this point we believe that FB is in control of both revenues and costs, as high advertiser ROI can drive pricing," says Janney's Tony Wible, reiterating his Buy and boosting to $67 from $56.
- FBR, Cowen, and RBC also join in ...
- Last night's earnings coverage
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