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Forget $3B In Revenue: Things "Don't Look Good" For Facebook

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Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#21

Post by kposehn »

mlinsey wrote: post #15

Doesn't sound too bad at all, frankly. Someone is just trying to add a little drama to what is otherwise a big success story. It is certainly true that usage of Facebook is rapidly shifting towards mobile, and that currently Facebook doesn't have any ads on mobile. That has got to impact revenue growth somewhat. But ads coming to Facebook mobile sometime soon is about as obvious as can be - and I'd bet on them doing…

Sponsored stories are coming to mobile soon, and from what I can tell actual mobile ads are following on their heels.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#22

Post by tatsuke95 »

pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

>"You could scrape together at least this much about any public company"

Point to another public company that has a P/E ratio as high Facebook that is missing earnings estimates. Nobody is claiming the company is going to fall apart tomorrow, but if growth is slowing already then they certainly aren't worth $100BB, or anywhere close.

I don't know how bad this really is, and we are still in a shaky economic climate. But if we assume that the information being reported is true, this is pretty bad. As the article suggests, they're applying some "quick fixes" to crank up the ad spends. Is that the best they can do?

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#23

Post by kposehn »

kposehn wrote: post #4

I'm kind of smelling some negative press push here about the IPO. A lot of the stuff doesn't seem to add up - despite supposedly solid leaks about documents, etc. What this might be an indicator of is a dedicated effort to push the stock price post-IPO lower so that various traders/funds can make a nice chunk of change off a rebound post-earnings. I'm fairly skeptical of this sort of conclusion - especially about sup…

Another key point is that you have to be willing to dump what isn't working - or a targeting group that doesn't work.

You may find a group that likes the product a whole bunch, but they can't or won't spare the cash to buy it. You may also be reaching them at the wrong time and they aren't close enough to the buy cycle.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#24

Post by tatsuke95 »

mlinsey wrote: post #15

Doesn't sound too bad at all, frankly. Someone is just trying to add a little drama to what is otherwise a big success story. It is certainly true that usage of Facebook is rapidly shifting towards mobile, and that currently Facebook doesn't have any ads on mobile. That has got to impact revenue growth somewhat. But ads coming to Facebook mobile sometime soon is about as obvious as can be - and I'd bet on them doing…

>"Someone is just trying to add a little drama to what is otherwise a big success story"

It's a fallacy to conflate "success" with "hype".

Facebook is going to make money and be successful, barring some unforeseen craziness. They made a billion in net income last year! However, where it seems that the tech world and the investment world diverge is in the expectations. $1BB (or 2,3,4,5) isn't enough to buy in at the anticipated price.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#25

Post by gph »

It's always amazed me that a company's outlook can look bad even though they're profit/revenue is growing, just because said growth isn't as big as it was in the past.

I can sort of see why from an economics perspective, the stock price is based on profit growth projections and if those projections don't hold up the price will naturally drop.

But it still seems crazy that we continually expect and pressure our public companies into growing their profit at a rate higher than it was previously growing, otherwise they aren't hitting performance expectations. I'm sure someone with more economics knowledge can explain it in a way that makes sense, but to me that seems like a logical fallacy. We expect what amounts to continual exponential growth.

Edit: Typos

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#26

Post by brudgers »

>"Expect more ads as Facebook tries to meet revenue projections."

As I've commented here before, I access Facebook in its own VM. The past couple of days, I have noticed a significant uptick in the number of ads displayed. However, the odds of my clicking one is no higher - just because I accepted a friend request this week from a politically conservative person who I went to high school with decades ago; it doesn't mean I want to buy a USS Ronald Regan hat.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#27

Post by scylla »

tatsuke95 wrote: post #22
pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

> "You could scrape together at least this much about any public company" Point to another public company that has a P/E ratio as high Facebook that is missing earnings estimates. Nobody is claiming the company is going to fall apart tomorrow, but if growth is slowing already then they certainly aren't worth $100BB, or anywhere close. I don't know how bad this really is, and we are still in a shaky economic climate.…

SalesForce is public and has P/E of 9500. http://finance.yahoo.com/q?s=CRM

The reason they don't miss earnings is that the expectation is so low. It doesn't matter, they're the 'cloud'.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#28

Post by cs702 »

Some advertisers are getting much better results with Facebook ads than with Google AdWords -- for instance, see http://jeffmatthewsisnotmakingthisup.blogspot.com/2012/01/is...

(Money quote from that link: "...according to a friend in retailing, the average Facebook woman updates her relationship status to 'Engaged' within two hours of the guy actually proposing…so Facebook sells that relationship status information to retailers who have bridal registries. As my pal told me, 'We’ve been looking for this for fifty years.'")

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#29

Post by scylla »

tatsuke95 wrote: post #20
phuff wrote: post #6

The graph in this article shows revenues continuing to go up over the next 3 years... Just at a slower rate. That doesn't sound like "things don't look good" but more like "things don't look as amazing as they did, but still look pretty good." Of course, I have no idea about the validity of the underlying data in that graph... But still, it totally doesn't match up with the analysis of the numbers presented in the te…

When your P/E is greater than 100, people are expecting mad growth in the future. Growth slowing already? That's bad news for people looking at investing.

What would you call a P/E ratio over 9500? http://finance.yahoo.com/q?s=CRM

Both the stock and the P/E ratio has been growing for years.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#30

Post by sawyer »

pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

I had the same thought, further, this quote from the article stood out to me as challenging the author's premise, rather than supporting it: "and the company still hasn't developed a mobile platform that supports advertisements." Surely this is evidence that they haven't even come close to fully developing all of their possible revenue streams.

> "note: ads are not the only way FB can make money"

Facebook still has at least one massive hand to play, and they tipped it in the documents outlining their agreements with Zynga. Those documents stated that if Zynga created a first party site to host their games, Facebook would be the ones to provide ads for the pages. If they were to roll out an AdSense competitor which uses personal data rather than contextual to place ads on publisher sites it could be a huge win.

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