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.
Oct. 29, 2014, 9:15 AM
Oct. 29, 2014, 7:56 AM
- Buy the dip, says Needham's Laura Martin, noting the company's focus on the long-term on the earnings call is giving investors the jitters about the short-term. The upped expenses guidance for FY2015, she says, suggests Facebook (NASDAQ:FB) will be reinvesting profits in longer-term opportunities.
- "Facebook’s execution continues to be strong and we believe very few companies in the world have the reach, the audience engagement and the monetization opportunity that Facebook has in front of it today," says Sterne Agee's Arvind Bhatia, reiterating a Buy rating and $85 price target.
- Similar sentiments are voiced by Goldman, Cowen, Susquehanna, Evercore, and SunTrust.
- Shares -7.7% premarket
- Last night's earnings coverage
Oct. 28, 2014, 7:09 PM
- Facebook's (NASDAQ:FB) aggressive 2015 spending forecast isn't driven by any particular field, but by large investments in everything from the core service to ad tech to new products, CFO Dave Wehner insisted on the CC. He suggested much of the new spending will be on hiring. (live blogs: I, II)
- Price per ad soared 274% Y/Y in Q3, thanks in part to an overhaul of Facebook's right-hand column PC ads (they typically carry lower prices). With total ad revenue up "only" 64%, ad impressions fell 56% (fewer ads are shown on mobile).
- PC ad sales rose 11% Y/Y, but were flat Q/Q. Though payments/other revenue rose 13% Y/Y, payments volume from games fell 2% due to lower PC gaming activity (a negative for ZNGA, which is down 1% AH).
- Sheryl Sandberg notes only 11% of ad budgets are for mobile, and predicts improving inaccurate measurement systems (previous) will boost ROI and spending. She reiterates Facebook will take it slow in ramping Instagram and video ads, and that Facebook is aiming for Instagram to eventually have 1B users of its own (up over 4x from current levels).
- Mark Zuckerberg cautions Oculus is unlikely to see 50M-100M unit shipments in the next few years, but reiterates he wants Oculus' VR headsets to be a mass-market product long-term. He also states Facebook plans to make new investments in growing public content viewing/sharing, where its focus on privately connecting friends/family can make for a tricky balancing act.
- Facebook discloses WhatsApp (just beginning to monetize) had 2013 revenue of just $10.2M, and a loss of $138M ($98.8M from stock compensation).
- Other details: 1) Of the 33M MAUs added in Q3, only 6M came from North America and Europe. 2) ARPU rose to $2.40 from $2.24 in Q2 and $1.72 a year ago. North American ARPU ($7.39) remains an outlier. 3) 456M MAUs (34% of them) are mobile-only.
- FB -9.4% AH. Prior earnings coverage.
Oct. 28, 2014, 5:35 PM
- Facebook (NASDAQ:FB) guides on its Q3 CC for Q4 revenue to be up 40%-47% Y/Y; that's in-line with a consensus of 44.7% growth, and slightly below at the midpoint.
- The company now expects 2014 GAAP costs/expenses to rise 45%-50% (boosted by WhatsApp stock compensation expenses), up from a prior outlook of 30%-35%. It also forecasts non-GAAP spending will rise 50%-70% Y/Y in 2015 - CFO Dave Wehner calls 2015 a "significant expense" year.
- Live blogs: I, II
- Q3 results, details
Oct. 28, 2014, 5:35 PM
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Oct. 28, 2014, 4:19 PM
- Facebook's (NASDAQ:FB) ad revenue rose 64% Y/Y in Q3 to $3.2B, just a slight slowdown from Q2's 67% clip. Mobile was 66% of ad revenue, up from 62% in Q2 and 49% a year ago. Payments/other revenue rose 13% to $246M, faster than Q2's 9% clip.
- User growth slowed a bit: Monthly active users (MAUs) +2% Q/Q and +14% Y/Y to 1.35B, and mobile MAUs +5% Q/Q and +29% Y/Y to 1.12B. Q/Q growth was respectively 3% and 6% in Q2.
- Daily active users (DAUs) +4% Q/Q and +19% Y/Y to 864M. DAUs equaled 64% of MAUs, up from 63% in Q2 and 61% a year ago (higher engagement).
- GAAP costs/expenses +41% Y/Y to $1.81B, a pickup from Q2's 22% growth. R&D spend +65% to $608M, sales/marketing +61% to $374M, G&A +51% to $259M.
- Free cash flow +15% to $766M, less than net income of $1.15B. $482M was spent on capex (15% of revenue).
- FB -0.6% AH. Q3 results, PR, slides (.pdf)
Oct. 28, 2014, 4:02 PM
Oct. 27, 2014, 5:35 PM
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Oct. 23, 2014, 2:35 PM
- Rooms, a Facebook (FB +2.6%) app launching today on iOS (Android support should arrive in time), allows users to create discussion spaces (i.e. rooms) on specific topics. The rooms can contain text, photos, and videos, as well as comments from other users.
- Notably, the app doesn't require users to give their real names (a pseudonym will do), or even have a Facebook account. Invites to an individual room can be obtained by taking a picture or screenshot of a room's QR code.
- The app, vaguely outlined in an Oct. 7 NYT report, is arguably a response by Facebook to the popularity of pseudonymous discussion platforms such as Twitter, Reddit, and legions of Web message boards, and a recognition of the limits on discussion that stem from Facebook's real-identity requirement and focus on connecting with friends/family.
- Josh Miller, head of the team responsible for Rooms: "We don’t want this to be a place where you talk to friends ... There are many people out there that you didn’t go to high school with that you want to connect with." He adds the app is meant to be media-intensive. "If links are the currency of the web, photos are the currency of mobile."
- While Facebook's core services, Instagram, and WhatsApp continue faring quite well, the same doesn't hold for many of the new Facebook apps launched over the last two years. Examples include Flipboard alternative Paper, Snapchat alternative Slingshot, the Home Android UI, and Instagram's Hyperlapse app.
- Update: Miller shares more thoughts on Rooms in a TechCrunch interview.
Oct. 20, 2014, 2:40 PM
- "We continued to favor the stock, in large part due to its mobile-advertising business and visionary management team, and we added to the fund's stake during the quarter," says a commentary letter from Will Danoff's Fidelity Contrafund (MUTF:FCNTX) to investors today.
- The fund didn't say how many shares it ended Q3 with, but had 42M shares of Facebook at the end of August, up from 36M at the end of 2013, with the stock accounting for 2.8% of AUM.
- Facebook (NASDAQ:FB) easily outpaced the S&P 500 both in Q3 and YTD, and Contrafund returned 1.77% in Q3 vs. the S&P's 1.13% advance.
- Other share class: FCNKX
Oct. 17, 2014, 6:17 PM
- Thanks to its relatively strong October performance, Facebook's (FB +4.6%) market cap ($188.8B) is bigger than IBM's ($179.4B). The 10-year-old company now has the 5th-highest market cap in the tech universe, behind only Apple, Google, Microsoft, and Alibaba.
- Meanwhile, Facebook partner Nanigans (provides software for managing Facebook ad campaigns) reports (.pdf) its clients saw their ad click rates rise 56% Q/Q and 195% Y/Y to 0.56%. Y/Y growth improved from 146% in Q2.
- The average prices for 1K ads sold on a CPM basis rose 80% Q/Q and 298% Y/Y to $2.98, while the average price for individual ads sold on a CPC basis fell 4% Q/Q and rose 30% Y/Y to $0.53. Mobile made up 62% of spending, up from 56% in Q2.
- Nanigans attributes the huge CPM growth to strong demand for news feed ads - their CPM rose 153% Y/Y to $5.62 - declining interest in cheaper right-hand column ads, larger right-hand column ad units, and (perhaps more interestingly) a 38% Q/Q increase in the use Facebook's Optimized CPM platform, which gives advertisers more control over campaigns and delivers better targeting.
- Facebook, of course, has made many other efforts to improve targeting. Q3 results arrive on Oct. 28.
Oct. 15, 2014, 4:45 PM
- Internet stocks are selling off in AH trading as Netflix craters in response to its light Q3 subscriber adds and disappointing Q4 guidance, and eBay slumps after providing weak Q4 guidance and reporting only 6% Y/Y Q3 Marketplaces growth.
- Google (NASDAQ:GOOG) -1.6% AH. Facebook (NASDAQ:FB) -1.5%. Amazon (AMZN - taking share from eBay) -2.8%. Twitter (NYSE:TWTR) -1.9%. LinkedIn (NYSE:LNKD) -4.2%. YELP -1.4%.
- Internet ETFs: FDN, PNQI, SOCL
Oct. 14, 2014, 3:31 PM
- Global growth, foreign-exchange, oil, and small caps are the subject of every client inquiry, says David Kostin. His team's recommendation: Buy "American exceptionalism."
- In Kostin's view, U.S. economy and corporate fundamentals are still strong, with economic growth expected by Goldman economists to be 3.2% next year, the fastest expansion since 2005. Europe is expected to grow just 1%.
- What his team likes are those stocks of companies which have a high proportion of domestic sales, plus sectors like Consumer Staples (XLP -0.1%) and Discretionary (XLY +0.7%) which stand to benefit from lower oil prices (plunging again today).
- As for small caps (IWM +0.9%), Kostin is wary, noting downward earnings revisions have boosted small cap P/E ratios even as prices have declined.
- The list of S&P 500 names capturing two or more of Kostin's themes: GT, GM, PCLN, AMZN, CMCSA, LOW, DG, TSN, ADM, CVS, AVP, WAG, PXD, HAL, JPM, BAC, SCHW, PNC, MS, C, GNW, LNC, MET, THC, AET, UNH, ESRX, HUM, WLP, BIIB, GILD, DAL, CMI, FLR, CRM, JBL, MA, FB, MU, FSLR, VMC, MON, T.
Oct. 7, 2014, 2:51 PM
- The NYT reports Facebook (FB -0.8%) is "working on a stand-alone mobile application that allows users to interact inside of it without having to use their real names," and plans to release it "in the coming weeks."
- The app's reported goal is to allow users to "use multiple pseudonyms to openly discuss the different things they talk about on the Internet; topics of discussion which they may not be comfortable connecting to their real names." It's unknown if the app will interact with Facebook's core site and apps, or whether it will support anonymous photo-sharing.
- At its spring f8 conference, Facebook introduced anonymous login support for 3rd-party apps. However, Zuck and other Facebook execs have defended requiring users of the company's core services to rely on their real-world identities.
- Facebook's real-identity requirement is "part of what made Facebook special in the first place," product chief Chris Cox recently asserted. However, the role pseudonym support has played in fueling the growth of Twitter, Instagram, Snapchat, and other platforms undoubtedly isn't lost on Facebook.
- Five months after launching, Facebook's mobile ad network (relies on Facebook data to deliver targeted ads on other sites/apps), has been opened up to all developers. Banner, interstitial, and native ads are supported. Millennial Media (MM -5.7%), among the companies in Facebook's crosshairs, is having a bad day.
- The Information reports major Web publishers such as Yahoo, Twitter, and Pinterest have balked at supporting Facebook's newly-launched Atlas ad-serving/measurement platform, due to wariness about sharing data with a perceived rival. Atlas, along with the mobile ad network and LiveRail, is pivotal to Facebook's efforts to challenge Google's display ad hegemony.
- Update: SA author Charles Moscoe argues Facebook's reported Atlas challenges highlight the value of Sizmek's (NASDAQ:SZMK) independent ad campaign management platform.
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