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Facebook (FB)

  • Nov. 18, 2013, 12:33 PM
    • Facebook (FB -3.7%) is headlining a selloff in several fast-growing U.S. Internet names; Twitter, which saw Wunderlich start coverage at Sell this morning, is also a notable decliner.
    • The NYT has published a column discussing Facebook fatigue among younger users, and discussing the possibility of a future where "where Facebook is no longer the default place on the web where people go to network."
    • Among other things, the paper highlights Facebook's recent U.S. teen DAU decline, recent survey data, and the rise of Snapchat, which reportedly turned down a $3B+ buyout offer from Facebook.
    • It also reports some developers have said Facebook made an "unusually aggressive" pitch for their support at a recent event, and were less inclined to to partner with the company as a result. Facebook, aided by its acquisition of popular mobile/Web app development platform Parse, wants to become a de facto platform for consumer Web app development.
    • The WSJ's Farhad Manjoo argues Facebook doesn't need to be worried about Snapchat's popularity with teens. "Kids are often wrong. There is little evidence to support the idea that the youth have any closer insight on the future than the rest of us do."
    • Paul Kedrosky: "Don’t track teen tech usage because they’re brilliant tech futurists. Do it because they, unlike adults, over-sample new services."
    • Previous: Facebook, Twitter, Instagram, and boredom
  • Nov. 13, 2013, 2:05 PM
    • The WSJ reports Facebook (FB +3.1%) offered at least $3B for Snapchat in "recent weeks," but was turned down. The paper had previously reported of a $1B+ offer.
    • Snapchat co-founder/CEO Evan Spiegel is said to be unlikely to consider an acquisition at least until early next year, by which time he hopes further growth will allow for a higher valuation. Snapchat currently doesn't have any revenue.
    • Chinese messaging/gaming giant Tencent has reportedly offered to lead an investment round in Snapchat that would give the privacy-friendly photo-sharing platform a valuation of $4B (previous).
    • The latest report comes a couple weeks after Facebook disclosed it saw a Q/Q drop in U.S. teen DAUs, and amid general concerns Facebook engagement is declining among younger users who view it as more boring than other social media platforms that are more public-facing and/or support a greater degree of anonymity.
    • On the other hand, Instagram's popularity among younger U.S. users continues to grow.
  • Nov. 11, 2013, 9:18 AM
    • With many Internet names having seen giant 2013 gains that have led P/E and P/S ratios to rise to eye-opening levels, Morgan Stanley is cutting its view of the sector to In-Line from Attractive, even though it thinks industry trends remain healthy.
    • Google (GOOG) has been pulled from MS' Best Ideas list. The Web giant's shares are up 44% YTD, but their multiples remain subdued compared with those of some peers: Google currently trades at 16x 2014E EPS after backing out net cash/investments. Shares -0.5% premarket.
    • Facebook (FB) -1.3%. Top VC firm Andreessen Horowitz has disclosed the sale of roughly 1/3 of its Facebook stake (2.28M shares).
    • The sector has already corrected a bit; shares sold off hard on Thursday as Twitter made its much-hyped debut.
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  • Nov. 7, 2013, 11:48 AM
    • Even as Twitter blasts off to a $25B valuation following its much-hyped IPO, U.S. and foreign Internet stocks are giving back some more of the massive 2013 gains that have led many names to trade at steep multiples.
    • One sign investors in this space are in a profit-taking mood: Zillow (Z -4.3%) and YY both sold off yesterday in spite of delivering Q3 beats (I, II) and above-consensus guidance; Zillow is adding to its losses today. Likewise, SouFun (SFUN -5.4%) has turned negative after providing a Q3 beat and strong guidance.
    • Notable U.S. decliners: FB -2.4%. LNKD -2.8%. GRPN -4.7% (reports after the close). ZNGA -2.7%. P -3.8%. TRLA -5.4%.
    • Notable foreign decliners: BIDU -2.4%. QIHU -6.7%. SINA -5% (generally viewed as the Chinese Twitter). DANG -6.2%. VIPS -7.7%. RENN -4.2%. AMAP -4.7%. CTRP -5.7%. YOKU -5.6%. RENN -4.2%. YNDX -5.1%. MELI -2.4% (plunged yesterday thanks to a Q3 miss). SIFY -2.6%.
    • Internet/social media ETFs: FDN, PNQI, SOCL
  • Nov. 3, 2013, 5:30 PM
    • "Someone once told me that Facebook (FB) would be a great service if you un-friended 90% of your friends," writes Tech.pinions' Ben Bajarin, highlighting what he views as a core problem with the social networking colossus.
    • While Facebook users may initially find "the joy of discovery and connecting" with people they know 'a very sticky experience," the service eventually "becomes more about maintaining than connecting," and feeds filled with far more "noise" than interesting material. Meanwhile, limiting one's friends list to close/interesting contacts would drastically limit the amount of fresh material showing up.
    • Twitter (TWTR), as Bajarin notes, has a very different problem. New users can have a much harder time finding contacts who are active users (that might be contributing to Twitter's heavy churn). But those who hang around often find plenty of compelling material delivered by non-contacts.
    • Moreover, while Facebook is encroaching on Twitter's turf by encouraging more posting of public material - outside of celebrities and businesses, success has been moderate thus far - Twitter is trying to appeal to Facebook users by allowing images, videos, and cards to appear within timelines.
    • Facebook's problem is of particular relevance following a Q3 in which North American MAUs rose by only 1M Q/Q, and U.S. teen DAUs declined; the latter revelation follows surveys and anecdotal reports pointing to declining popularity with U.S. teens, who have acted as trendsetters for many Web services (including Facebook, back in its college-only days). North America accounted for 48% of Facebook's Q3 revenue.
    • But while U.S. teens may be cutting down on their Facebook use, they're dialing up their Instagram use just as the mobile photo-sharing platform begins showing feed ads. An online ad exec: "If you factor in Instagram, you would find that Facebook as a company is actually increasing engagement with teens."
  • Nov. 1, 2013, 10:10 AM
    • Even though it quickly gave back the big AH gains it initially saw following its Q3 beat, Facebook (FB +2.7%) is now up 6% post-earnings. Today's gains come with the help of an upgrade to Buy from Argus, which praises Facebook's strong mobile growth and improving engagement.
    • Argus downgraded Facebook to Hold on July 26, shortly after the company's Q2 beat. Shares traded at $34 at the time.
    • JPMorgan joined the list of Facebook bulls defending the company yesterday; the firm argues rising advertiser interest in Facebook will allow the company to grow its news feed ad revenue via higher prices, even as ad load flattens.
    • Since the Q3 report, Facebook's 2014 EPS consensus has risen to $1.11 from $0.99. That still leaves the social networking kingpin trading at 43x 2014E EPS exc. cash.
    • Yesterday's sell-side commentary
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  • Oct. 31, 2013, 7:36 AM
    • Not spooked by ad trends, BMO downgrades Facebook (FB) from Buy to Hold anyway due to the lack of visibility surrounding the opportunity in Social TV advertising. For the stock to move higher, the Social TV story is needed ... the rest is priced in.
    • Deutsche: "We think the ad-load issue is going to weigh on the multiple but don’t see it as net risk to estimates ... would add to positions on pullbacks."
    • Noting decelerating user growth, steady newsfeed ad load, and several data points suggesting engagement in developed markets isn't growing that much, Bernstein suggests revenue growth must increasingly come from rising price-per-ad. "We don’t think there is enough visibility into the demand for Facebook ads to make a high conviction call on the stock."
    • Calling the big selling amid the CC an "over-reaction," Pivotal Research ups to a Buy with price target lifted to $57 from $48. "So long as [teens] can be reached on Facebook to a degree and so long as FB has a unique capability to reach more total people than any other media owner, Facebook retains advantage in its ad sales efforts against most advertisers."
    • Evercore's Ken Sena boosts his estimates and hikes the price target $5 to $65. Even assuming the absence of ad load growth beyond 2014 (which he's not sure will happen), says Sena, his Street-high estimates can still be met thanks to the remaining three ad growth drivers: users, engagement, and pricing.
    • Shares +3.5% premarket.
    • Last night's earnings coverage.
  • Oct. 30, 2013, 6:57 PM
    • Facebook (FB) doesn't plan to grow the number of ads it places within news feeds any further, the company disclosed on its CC. With feed ads having fueled Facebook's tremendous revenue growth in recent quarters, the company will now have to focus on growing via other ad sources (Instagram, FBX) and formats (video), and by improving ad prices.
    • Also: Sheryl Sandberg has disclosed 20M small businesses now have Facebook pages (up from a prior 18M), and that every advertiser in AdAge's Global 100 is a Facebook client.
    • David Ebersman mentions Facebook's tax rate will rise in Q4. However, 2014 capex will be lower than originally planned. Mark Zuckerberg reiterates Facebook will take a cautious approach to Instagram/video ads.
    • In its slide deck, Facebook notes its global ARPU rose 8% Q/Q and 33% Y/Y to $1.72 ($1.53 from ads, $0.19 from payments). However, the gap between the company's North American ARPU ($4.85) and its European ($1.96) Asian ($0.81), and rest of world ($0.67) ARPUs remains enormous. North America made up 48% of Q3 revenue vs. 47% in Q2 and 50% a year ago.
    • North America has 199M MAUs (+1M Q/Q), Europe 276M (+4M), Asia 351M (+12M), and the rest of the world 362M (+16M). 254M of Facebook's MAUs (21%) are now mobile-only.
    • Shares -0.2% AH. CC live blogs: I, II. More on Facebook.
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  • Oct. 30, 2013, 5:55 PM
    • On Facebook's (FB) Q3 CC, CFO David Ebersman admits his company saw a decline in teen daily active users (DAUs), even as usage within the demographic remained steady.
    • The disclosure comes amid plenty of commentary (as well as some survey data) suggesting Facebook's popularity with U.S. teens is waning. The company recently changed its teen policy terms, and reportedly made a failed attempt to buy Snapchat, which is quite popular with the demographic.
    • Facebook also says it expects its Payments revenue to decline (+24% Y/Y in Q3) in Q4. It's worth noting here Facebook recorded four months of Payments revenue in Q4 2012.
    • Mark Zuckerberg once more talks up Facebook's strong mobile engagement rates (previous), pointing to comScore data that indicates Facebook accounts for 20% all U.S. app usage.
    • Shares -0.4% AH after being up over 15% immediately following the release of Facebook's Q3 report.
    • Q3 results, details. CC live blogs: I, II.
  • Oct. 30, 2013, 5:45 PM
  • Oct. 30, 2013, 4:30 PM
    • After rising 75% Q/Q in Q2, Facebook's (FB) mobile ad sales rose another 34% Q/Q in Q3 to ~$880M, and made up 49% of ad sales (up from 41% in Q2). The figure also soundly beat a consensus (as reported by Goldman) of $791M.
    • Total ad sales rose 13% Q/Q and 66% Y/Y to $1.8B, and accounted for 89% of revenue. Payments revenue rose 2% Q/Q and 24% Y/Y to $218M.
    • Facebook had 1.19B monthly active users at the end of Q3, +3% Q/Q and +18% Y/Y. Mobile MAUs +7% Q/Q and +45% Y/Y to 874M. In a sign of improving engagement, daily active users once more grew at a faster pace than MAUs, rising 4% Q/Q and 25% Y/Y to 728M (61% of MAUs).
    • Costs/expenses +45% Y/Y after rising 56% in Q2. R&D spend +51% Y/Y to $369M, sales/marketing +39% to $233M, G&A +13% to $171M.
    • Capex was $284M vs. $266M in Q2. Cash/investments totaled $9.3B at quarter's end.
    • With shares having taken off since the Q2 report, Facebook is paring its gains a bit. FB +10.4% AH.
    • Q3 results, PR, slides.
  • Oct. 30, 2013, 4:08 PM
    • Facebook (FB): Q3 EPS of $0.25 beats by $0.06.
    • Revenue of $2.02B (+60% Y/Y) beats by $110M.
    • Shares +15.3% AH. CC at 5PM ET. (PR)
  • Oct. 30, 2013, 10:17 AM
    • Better late than never? BTIG's Richard Greenfield, who upgraded Facebook (FB +0.2%) to Neutral in July following its blowout Q2 numbers, has upgraded shares to Buy in advance of this afternoon's Q3 report.
    • Greenfield, who has frequently criticized the quality of Facebook ads: "We notably underestimated Facebook’s stickiness as a consumer utility for messaging and photosharing, not to mention the power of Facebook as a "cure for boredom," both in-home and on-the-go. BTIG's survey data found even users who say they're dissatisfied with Facebook "continue to use it on a daily basis."
    • He's also optimistic about the potential of Instagram to offer high-quality brand ads backed by strong user feedback. Om Malik recently made a similar argument: he sees native ad formats such as Instagram's yielding much better engagement than standard display ads (for which click rates have been steadily dropping), and potentially "[openng] up a whole new era of Madison Avenue creativity."
    • Twitter (TWTR) doesn't want to get left out: the company just began allowing previews of images and Vine videos to directly appear in timeline feeds. That, in turn, could open the door to visual brand ads.
    • Facebook's sponsored news feed posts and Twitter's Promoted Tweet, Trend, and Account products also qualify as native ad products.
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  • Oct. 30, 2013, 12:10 AM
  • Oct. 29, 2013, 5:35 PM
  • Oct. 29, 2013, 2:14 PM
    • The WSJ reports BlackBerry (BBRY +2.5%) execs flew to California to meet with Facebook (FB +0.8%) to "gauge its interest" in a possible bid for the company. Sources state it's unclear if Facebook is interested in playing ball. Nonetheless, BlackBerry shares have caught a bid on the report.
    • Facebook joins a very long list of names attached to BlackBerry M&A rumors. The list already includes Lenovo, P-E firm Cerberus, major BlackBerry shareholder Fairfax Financial, and co-founder Mike Lazaridis.
    • "If someone knocks on your door, don't answer, it is just Blackberry asking you to buy them," a trader quips to Notable Calls.
    • Earlier: BBM Android/iOS downloads top 20M
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Company Description
Facebook Inc is a social networking website which builds products that creates utility for users, developers and advertisers.