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Facebook’s 1st-Quarter Profit Falls 12%

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Re: Facebook’s 1st-Quarter Profit Falls 12%

#31

Post by Bakkot »

dj_axl wrote: post #25
gauravk92 wrote: post #8

Earlier quoted context omitted.

Facebook also owns your social graph and that is what they exclaim proudly about the most as well. If any other service wants access to it they have to ask Facebook and they can't just take it. And if there is no Facebook integration, then theres an additional level of friction in getting new users. It's definitely a tough market to breakthrough in because of Facebook (Ask google).

> Facebook also owns your social graph Any email provider also has your social graph. The only problem with email is that it is seen as "old" compared to the "new" of Facebook and Twitter. Something else will come along and be the new "new" and that will be the end of Facebook.

> Any email provider also has your social graph.

They really don't. Not the way Facebook does; not for the post-Millennials. People email bosses and professors and acquaintances; they use Facebook for friends.

Re: Facebook’s 1st-Quarter Profit Falls 12%

#32

Post by redguava »

As much as I like to see people talking about profit rather than revenue, revenue is really important as long as you are profitable. It is only when you are losing large amounts of money every month that revenue is less impressive.

Facebook had over 1 billion dollars revenue in the quarter and they were profitable. Why is it so bad that they decided to spend most of that revenue to grow the business further rather than keep it as profit.

If revenue is decreasing, thats another story, but profit being down for one quarter is a result of how much they are reinvesting their money.

Re: Facebook’s 1st-Quarter Profit Falls 12%

#33

Post by jbooth »

repsilat wrote: post #28
redthrowaway wrote: post #20

Earlier quoted context omitted.

Facebook's valuation is based on potential , as opposed to any real metrics. It has a staggering number of active users and frightening amounts of data about them. The bet is that they find a way to capitalize on it. I'm not bullish on facebook by any stretch of the imagination, and their P/E is ridiculous, but it's also the wrong metric to be looking at when deciding whether it's a good investment.

> It has a staggering number of active users and frightening amounts of data about them The financial value of those users must grow super-linearly. The most recent figures I can find put them at having 901 million active users, which means they're valued at $111 per active user. Crazy stuff.

If they can sell a $3 CPM, and each user loads 40,000 impressions lifetime, then they've monetized each user at $120 over that time period. That's a lot of impressions per user, but people click a lot on facebook. Plenty of room for them to grow.

Re: Facebook’s 1st-Quarter Profit Falls 12%

#34

Post by discodave »

jacques_chester wrote: post #7
philipithomas wrote: post #4

Earlier quoted context omitted.

However, I am interested in seeing how their business diversifies over time - Google has both stability and revenue from expanding beyond search. Additional features such as SSO and analytics are increasing the value of Facebook beyond just friend-to-friend interactions, and I am curious about how their business plan will support long-term stability.

Google is actually not diversified at all. Out of $38 billion of revenue earned in 2011, $36.5 billion came from advertising[1]. [1] http://investor.google.com/financial/tables.html -- compare "Revenues" to "Total Advertising Revenues".

Get back to /r/weightroom!

Re: Facebook’s 1st-Quarter Profit Falls 12%

#35

Post by thezilch »

jbooth wrote: post #33
repsilat wrote: post #28

Earlier quoted context omitted.

> It has a staggering number of active users and frightening amounts of data about them The financial value of those users must grow super-linearly. The most recent figures I can find put them at having 901 million active users, which means they're valued at $111 per active user. Crazy stuff.

If they can sell a $3 CPM, and each user loads 40,000 impressions lifetime, then they've monetized each user at $120 over that time period. That's a lot of impressions per user, but people click a lot on facebook. Plenty of room for them to grow.

Honestly (as not a familiar of FB's advert system), can they sell a $3 CPM? On every impression of a user -- inventory typically degrades as session-impressions degrade?

40K impressions would require 110 pageviews/day over 365 days. For comparison, Reddit averages 13 pageviews/visit [0]. I imagine both are largely dependent on their image traffic; can we draw conclusions between the two? Anecdotal evidence would have me believe I load less "ad pageviews" on Facebook than Reddit.

[0] http://blog.reddit.com/2012/01/2-billion-beyond.html

Re: Facebook’s 1st-Quarter Profit Falls 12%

#36

Post by jonknee »

jbooth wrote: post #33
repsilat wrote: post #28

Earlier quoted context omitted.

> It has a staggering number of active users and frightening amounts of data about them The financial value of those users must grow super-linearly. The most recent figures I can find put them at having 901 million active users, which means they're valued at $111 per active user. Crazy stuff.

If they can sell a $3 CPM, and each user loads 40,000 impressions lifetime, then they've monetized each user at $120 over that time period. That's a lot of impressions per user, but people click a lot on facebook. Plenty of room for them to grow.

That's a ridiculously high CPM for social media. The page views are very low value, even with all the targeting. Considering their revenue now and their traffic figures (over 1 trillion page views a month), their average is currently very low. $1B / 3T page views = $.33 RPM. They get a decent chunk of revenue through things other than advertising (namely their payments system) and that's a low-ball on the traffic, their traffic is very low value. Further growth is likely to come from international markets that are also very tough to monetize. To get that RPM up 10-20x would be astonishing.

Re: Facebook’s 1st-Quarter Profit Falls 12%

#37

Post by jacques_chester »

discodave wrote: post #34
jacques_chester wrote: post #7

Earlier quoted context omitted.

Google is actually not diversified at all. Out of $38 billion of revenue earned in 2011, $36.5 billion came from advertising[1]. [1] http://investor.google.com/financial/tables.html -- compare "Revenues" to "Total Advertising Revenues".

Get back to /r/weightroom!

DYEHN?

Re: Facebook’s 1st-Quarter Profit Falls 12%

#38

Post by suking »

zred wrote: post #17

Assuming earnings of $205M per quarter and a valuation of $100B, that would put Facebook's P/E ratio at 122. Today, Apple is at 16.3, Google at 18.1, Netflix at 24.4, and Microsoft at 11.7. Now, it's completely possible that Facebook's earnings growth will outstrip those more established companies. However, it does show that one has to think Facebook will grow its earnings at a considerably faster rate than those com…

Only way I can see them fitting into $100bn valuation is if they come out with an AdSense competitor that not only is contextual, but if you are signed into FB also based on your likes/social graph.

Re: Facebook’s 1st-Quarter Profit Falls 12%

#40

Post by tatsuke95 »

jacques_chester wrote: post #7
philipithomas wrote: post #4

Earlier quoted context omitted.

However, I am interested in seeing how their business diversifies over time - Google has both stability and revenue from expanding beyond search. Additional features such as SSO and analytics are increasing the value of Facebook beyond just friend-to-friend interactions, and I am curious about how their business plan will support long-term stability.

Google is actually not diversified at all. Out of $38 billion of revenue earned in 2011, $36.5 billion came from advertising[1]. [1] http://investor.google.com/financial/tables.html -- compare "Revenues" to "Total Advertising Revenues".

Because Google is an advertising company (so is Facebook). It shouldn't be a surprise that advertising is their main source of income. But at least you can point to a multitude of products within which Google places ads, as well as devices and software to provide places to put ads. Facebook, not so much. Yet?
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