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Facebook Profit Jumps 71% Year-over-Year

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Re: Facebook Profit Jumps 71% Year-over-Year

#231

Post by throwaway5752 »

thaumasiotes wrote: post #217
nradov wrote: post #95

Earlier quoted context omitted.

Companies don't try to maximize total profit, but rather return on invested capital.

This can't possibly be right. Why would you forego making extra money to keep your statistical average up? What are you getting from the average number? Your theory predicts that price discrimination can't happen because companies would rather sell M widgets at X price than sell M widgets at X price and N widgets at Y price.

It's completely right.

Why would you invest $250K for a year's pay of an employee for $0 return. You can invest that $250K in a CD for 2% and get $5,000.

Shareholders are going to have no interest (long term) having companies invest their capital in the form of cash on the balance sheet at below market rates. Hence dividends or buybacks if they can't demonstrate sufficient roic on internal projects.

You can back into a target revenue/employee by looking at risk free rate of return + equity premium (say 7%), net margin (35% for FB this Q), and say if an avg employee earns $250K .... then they'd want a bit less than $800K/employee (35/100 * x >= 250k + (.07 * 250k)).

I don't think your comparison to widgets holds up. Would a company invest capital in more production capacity to sell more widgets at zero margin (all else being equal)? No, they'd distribute it to shareholders so they could invest it in bonds or other companies, and that's the analogy.

Re: Facebook Profit Jumps 71% Year-over-Year

#232

Post by ptr_void »

stepanhruda wrote: post #224
ptr_void wrote: post #184

Earlier quoted context omitted.

If not with Facebook and Alphabet, there would still be most of those companies selling their products, with other means or site. There's not much that Facebook adds other than number of people it has using their site during their off times. If people needed to buy things, they could have easily looked it up on other sites or real places. There are many companies that do much more important things, produces more usef…

Ah yes, no need for internet at all. We could already send messages via other means before it.

I don't follow

Re: Facebook Profit Jumps 71% Year-over-Year

#233

Post by thaumasiotes »

throwaway5752 wrote: post #231
thaumasiotes wrote: post #217

Earlier quoted context omitted.

This can't possibly be right. Why would you forego making extra money to keep your statistical average up? What are you getting from the average number? Your theory predicts that price discrimination can't happen because companies would rather sell M widgets at X price than sell M widgets at X price and N widgets at Y price.

It's completely right. Why would you invest $250K for a year's pay of an employee for $0 return. You can invest that $250K in a CD for 2% and get $5,000. Shareholders are going to have no interest (long term) having companies invest their capital in the form of cash on the balance sheet at below market rates. Hence dividends or buybacks if they can't demonstrate sufficient roic on internal projects. You can back into…

> I don't think your comparison to widgets holds up. Would a company invest capital in more production capacity to sell more widgets at zero margin (all else being equal)? No

Who said anything about zero margin? You're claiming that if I can sell one widget at a high price (high margin!), I should be unwilling to sell any at a lower price (but still high margin!) than the first one would sell for, because my rate of return on investment would go down (assuming the cost of producing a widget is dominated by variable costs). This does not describe the behavior of anything.

Re: Facebook Profit Jumps 71% Year-over-Year

#234

Post by defunctirl »

ghthor wrote: post #174
teirce wrote: post #142

Earlier quoted context omitted.

Maybe I'm just a crazy millennial, but I absolutely loathe the idea of FB / Insta stories. Snapchat going under wouldn't convince me to move over -- I'd just stop using the service and move on to communicating some other way. And Stories aren't the only appeal of SNAP, though I suppose they are a large producer of revenue. HN just loves to hate SNAP, and I can't really fathom why. I can get being skeptical but every…

Yeah, I don't get it either. As far as I'm concerned Snap is one of the most interesting startups recently because they started with as a software company that managed to actually make a Good consumer hardware item that I wear everyday. I love my Spectacles, I wasn't even a snapchat user before they released, but they are a slick device.

I quite like the idea of them, but I can't get past the design (which I know would look ridiculous on myself). Would be interested in playing around with a pair but they're not very common where I am.

Re: Facebook Profit Jumps 71% Year-over-Year

#235

Post by kgwgk »

deepGem wrote: post #229
fullshark wrote: post #164

Earlier quoted context omitted.

I'm not rooting for Snap to fail, any negative comments I made (and have seen here) were because I thought their IPO price was absurd. I think they can carve out a niche and be profitable but the expectation that they grow to the size of FB / GOOGL I just don't see it, and the IPO seemed to be priced based on that. I also thought their stock set up with zero voting rights was crazy but that's a separate issue.

Zero voting rights make a lot of sense for the founders in today's world of activist investors. Caveat, the founders act in good faith.

And make little sense for investors.

Re: Facebook Profit Jumps 71% Year-over-Year

#236

Post by mcintyre1994 »

The insane thing to me is that they've barely gotten started on monetising outside the Facebook feed. They've taken that, injected ads and garbage until it's useless for me and almost everyone I know, and billions still use it every day. Me and almost everyone I know use some combination of instagram, WhatsApp and Messenger, and they could inject way more ads into all of those. I'd probably end up not using them any more, but that's clearly not representative. It's insane how much un-monetised space they have right now.

Re: Facebook Profit Jumps 71% Year-over-Year

#237

Post by mcintyre1994 »

adventured wrote: post #177
encoderer wrote: post #167

Earlier quoted context omitted.

Great point. It's easy to judge twitter here, and by many different data points FB has been an exceptionally well run company, but engineers are a lot more expensive now than they were in 2010. I imagine Twitter has to pay interns today what Facebook was paying experienced engineers in 2010 (100% serious).

I definitely agree with the salary inflation. Here's another interesting contrast between them given that. Twitter has roughly twice as many employees, versus what Facebook had at a comparable monthly active user count. It's costing them something in the neighborhood of $200 million per year to keep those employees. Twitter's organization size was built up on the assumption of a much larger userbase that never materi…

Wait, Twitter are paying $200m on employees, bringing in $2.5bn and spending $3bn (draining half a billion)? I assumed their biggest expense would be employees, what are they spending $2.8bn/year on?

At that scale spending 4x what Facebook spent on employees at the same level (assuming 2x as many with 2x salary inflation) barely registers.

Re: Facebook Profit Jumps 71% Year-over-Year

#238

Post by Bakary »

sidcool wrote: post #223

I have met very very few people who actually like Facebook, and still it continues to make impressive strides, technologically and financially. May be I am living in a filter bubble where no one likes Facebook and there's a world somewhere where people are all the time hooked on FB, Instagram and WhatsApp. P.S. I use WhatsApp and like it, so it makes me minor hypocrite.

You might have noticed a trend in this thread of people claiming to hate facebook but also still using it regularly

Re: Facebook Profit Jumps 71% Year-over-Year

#239

Post by jacquesm »

johansch wrote: post #150
jacquesm wrote: post #111

Earlier quoted context omitted.

Buying their stock is supporting them so if you feel they are evil do not buy their stock.

You are assuming I don't want to profit on them being evil.

That makes you part of the evil. Really, your reasoning about this is not sound.

Re: Facebook Profit Jumps 71% Year-over-Year

#240

Post by Trundle »

SomeStupidPoint wrote: post #130
chollida1 wrote: post #5

Some fun Facebook facts from the earnings call/report - Facebook has a massive, $35.5 billion hoard of cash, cash equivalents and marketable securities. It's the third biggest S&P 500 company by this metric that isn't paying a dividend, after Berkshire Hathaway and Alphabet. - Facebook's headcount is now at 20,658. That's up 43 percent since last year - Average Revenue Per User Rises 23% to $4.73, Down from 4Q 2016 -…

Wait... So FB makes $1.60/mo per users through all that invasive marketing? ...Can I just give FB $5/mo to not keep their creepy profile on me? They get more money, I get not as creepily tracked.

Are you aware that facebook is very popular in the developing world? It basically is the internet for large amounts of SEA users. If that $5/month isn't sizeable to you then chances are that they make a shitload more off of your demographic than $1.60.
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