Facebook Soaring or Snoring?

Facebook earnings crushed Wall Street expectations by 5 cents per share sending the stock soaring 20% in after hours trading.   Revenues are up 53% from a year ago period.  Mobile advertising revenue represented 41% of Facebook's revenue.  Mobile monthly active users came in 819 million which is an increase 51% one year ago.  Daily active users rose 27% to 699 million while monthly active users at 1.15 billion.   These are outstanding numbers which will cause the market to price Facebook stock at a 20% premium.

However, will Facebook soar or snore?  Lets dig into the numbers.  A 5 cent per share beat of Wall Street earnings could be due to lowered guidance from last quarter or management lowering the bar purposely to beat Wall Street earnings expectations.  Many management teams at other companies play the expectations game with Wall Street and down play future earnings in order to cause a surprise beat of earnings.  I am not saying Facebook has or is playing this game.  I cannot recall Facebook even lowering guidance.   However, the revenue numbers are fantastic especially from mobile.  Facebook's revenues are definitely soaring.

Facebook had 819 million active monthly mobile users.  How does Facebook define active?  I personal have my Facebook account logged on in my mobile phone daily even though I rarely use it.  Do I count as an active mobile user? I wonder how many others do the same?  819 million is an astounding number which represents 12% of the world's population logged into Facebook on a monthly basis.  Daily active users were 699 million users or roughly 85% of the active monthly users were daily users.  Another astounding number.  Monthly active users I am guessing both mobile and non mobile were 1.15 billion or 1/7 (16.4%) of the world's population are monthly active users.  I have my doubts all these numbers represent individual users.  At one time I personally had 3 Facebook accounts for play games for the purpose to quickly increase my level. 

Since Facebook reported great numbers the financial media especially CNBC will constantly talk about and report about Facebook just like it did pre IPO.  CNBC blew up the company like it was the greatest thing since slice bread.  The public ate up Facebook and was dieing to get a piece of Facebook.  We all know what happened after Facebook went IPO.  Many lost their money and I believe are still down over 20%.  Nasdaq and the investment banks were heavily criticized over the Facebook IPO disaster.  However, now the game has changed, CNBC and Wall Street will once again promote the stock in their unique ways and Facebook may reach it's IPO price before year end.  THIS IS JUST A PREDICTION BASED ON NOTHING MORE THAN MEDIA HEAVY COVERAGE.  I am not recommending or bashing the stock.  DO YOUR OWN RESEARCH.


Source:  http://www.cnbc.com/id/100903640