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Facebook Q1 2018 Earnings Slides [pdf]

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Re: Facebook Q1 2018 Earnings Slides [pdf]

#41

Post by cryptoz »

scolson wrote: post #33

So wait... In the US, my "value" to facebook is about $100 a year? (~24/q rounded up) Can I subscribe to facebook and opt out of all advertising and any data sharing exposure with third-parties? That is totally worth $8-10/mo to me. Edit: I get it. You don't like this idea, or you don't think it will work, or you don't think facebook's investors will like it (full disclosure: I am one). Why on earth should that stop…

I don't think that's what that number means. If you paid that value in dollars, then Facebooks revenue-tie-to-network effects is gone. Facebook currently has the ability to 'innovate' on the data you provide and presumably convince investors that the value will rise over time due to Facebook's own engineering talent. On the other hand, if you are paying a flat fee, the entirety of Facebook's business model falls flat - that it can increase that value without you knowing. Could Facebook survive a price increase from subscriptions at $10/month to $100/month? Probably not. Could Facebook engineer another 10x return on your data? Probably.

So no, you can't subscribe. It wouldn't work.

Re: Facebook Q1 2018 Earnings Slides [pdf]

#43

Post by bvod »

scolson wrote: post #33

So wait... In the US, my "value" to facebook is about $100 a year? (~24/q rounded up) Can I subscribe to facebook and opt out of all advertising and any data sharing exposure with third-parties? That is totally worth $8-10/mo to me. Edit: I get it. You don't like this idea, or you don't think it will work, or you don't think facebook's investors will like it (full disclosure: I am one). Why on earth should that stop…

The problem is that the rev/user isn't constant. If they get more users, they earn more from each user. And conversely, if they lose users, they earn less from everyone. So even if a small percentage of their users opted to pay monthly, that would have a negative impact on facebook's earnings on the remaining population.

Re: Facebook Q1 2018 Earnings Slides [pdf]

#44

Post by kgwgk »

scolson wrote: post #37
pkaye wrote: post #35

Earlier quoted context omitted.

The problem for Facebook is that it is really not worth that much for many users. Even if they charge $10/year many would dump it.

I get many/most prefer to be the product than the customer. I, however, would love the option to switch.

Have you also considered that the users who would love the option to switch for $100 may be worth much more to them?

Re: Facebook Q1 2018 Earnings Slides [pdf]

#45

Post by pkaye »

scolson wrote: post #37
pkaye wrote: post #35

Earlier quoted context omitted.

The problem for Facebook is that it is really not worth that much for many users. Even if they charge $10/year many would dump it.

I get many/most prefer to be the product than the customer. I, however, would love the option to switch.

I guess it wouldn't hurt to give options. I think Google has given this option for their ad network... I wonder how many people subscribe to that.

Re: Facebook Q1 2018 Earnings Slides [pdf]

#46

Post by JBReefer »

gizmodo59 wrote: post #19
alberth wrote: post #12

Slide #3 & #5 are super interesting. US/Canada is ~10% MAU but generates ~50% of the overall revenue. I wonder why US generates so much revenue compared to its small user base

This is true not just for Facebook. Consumer spending per person in US is very high compared to many other countries in the world. https://en.wikipedia.org/wiki/List_of_largest_consumer_marke... The businesses that wants to run ads also spend a lot. Its also true for Enterprise Software to some extent. I work for an enterprise software company and despite having had a decade of presence and having been founded in Eur…

People don't understand how much wealthier the US is than most of the Western World. I realize, and please don't harp on, the fact that healthcare and college aren't free here, but the median German makes the less money than the median income in all but 9 states, and it becomes substantially more unequal when you look at PPP.

https://mises.org/wire/if-sweden-and-germany-became-us-state...

Now, if you want to talk about Quality of Life, instead of per capita income, I think there's probably a lot more going for the EU - much lower crime, better infrastructure, less absurd politics, more vacation. I'd definitely live in Nice over Minnesota, and I love Minnesota.

Re: Facebook Q1 2018 Earnings Slides [pdf]

#48

Post by adventured »

kgwgk wrote: post #42
mbesto wrote: post #15

$16B in FCF in 2017 Thats what you call "printing cash".

The question is whether that can justify a valuation 30 times as large.

They're tracking to around a likely ~$23 billion in net income for 2018. That's a 20 PE three quarters out.

That's for 50% sales growth, 63% net income growth. That's a bargain in this market.

Microsoft has hardly net grown its income in a decade and it's sporting a 30 PE; nearly all of their valuation increase the last five years is multiple inflation. Coca Cola has a 30 PE ratio and nearly zero growth for a decade. The same for McDonald's. Boeing has a ~25 forward PE ratio for ~10% growth. Walmart is getting a mid 20s PE for barely any growth. The same pattern holds true across most of the traditional blue chips. It's even worse for other tech companies, the PE ratios there are hilariously inflated, from Workday or Salesforce to nVidia to Activision to Netflix & Amazon.

If anything Facebook is considerably undervalued here vs the wider market. (note: I have no position in Facebook)

Re: Facebook Q1 2018 Earnings Slides [pdf]

#49

Post by thaumaturgy »

roddux wrote: post #14

My main takeaway from this is that #deleteFacebook has been a flash in the pan-- their active user count is still increasing across all regions. Also to note, FB only pay effectively 11% tax on some 12 billion dollars worth of revenue.

Yeah, I may have to eat some crow from an argument the other day with another HN user. Surveys and #deleteFacebook and protests and so forth seemed to indicate that people did finally start getting interested in their own privacy.

But no. Somehow, even with a declining youth demographic and widespread reports of less time spent on site and the CA fiasco, they still ended up with a growth of users in all markets.

I've wondered sometimes whether we're headed towards a post-privacy world, and what it'll look like -- not just one in which there is little privacy, but one in which privacy is not something that most people think about or value.

Re: Facebook Q1 2018 Earnings Slides [pdf]

#50

Post by Rafuino »

Can anyone explain why their operating margin is seemingly seasonal, improving through the year?

And damn, that tax rate is insanely low. Looks like they're settling into around 10% effective tax. Average across profitable companies is ~25% according to an NYU study I linked to below. Damn.

www.stern.nyu.edu/~adamodar/pc/datasets/taxrate.xls

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