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Technology Stocks : Meta Platforms, Inc. (Facebook) -- Ignore unavailable to you. Want to Upgrade?

To: The Ox who wrote (1222)	1/31/2013 1:20:08 PM
From: Glenn Petersen	1 Recommendation Respond to of 3790

How Facebook Can Justify Its High Valuation By ROBERT CYRAN Breakingviews DealBook New York Times January 31, 2013, 12:54 pm Facebook deserves the benefit of the doubt about its rocketing costs. The social network’s bills jumped about 80 percent in the fourth quarter. That’s worrying — it’s twice as much as the top line grew. But all-important mobile advertising revenue doubled in 90 days. The potential profit justifies heavy investment. The proliferation of small screens was the biggest threat facing Facebook. But there are increasing signs that it is turning this into an even bigger opportunity. Advertisers had been reluctant to promote their wares or services on tablets and smartphones. And Facebook didn’t even bother trying to entice them until last spring. But increasingly, slick mobile devices and better metrics for measuring the effectiveness of campaigns — and the fact that people now spend so much time on their devices — is attracting advertisers. Facebook, along with Google, appears to be one of the biggest benefactors. Mobile accounted for 14 percent of advertising in the third quarter, but 23 percent in the three months to December. Throw in the fact that overall advertising, which accounts for most revenue, is growing, and mobile just about doubled. But this didn’t come free. Operating profit was actually slightly lower. Facebook has increased spending on research and development, raised headcount by 40 percent over the course of a year and lifted capital expenditure by 45 percent. And the splurge isn’t over: the firm will increase investments in areas like search and spend more on information technology infrastructure this year. That’s a smart choice. Facebook now has more users on mobile devices than desktops and the number should grow quickly. Advertisers are growing more likely to focus on such users. And mobile ads still cost less than desktop ads, even though mobile users are probably worth more — reaching people locally is the holy grail of advertising. Sure, with the stock priced at nearly 50 times estimated earnings, investors may be baking in too much future profit. But seizing the mobile opportunity is the best way for Facebook to justify its high valuation. Robert Cyran is a columnist for Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com. dealbook.nytimes.com

To: The Ox who wrote (1222)	5/6/2013 9:36:48 AM
From: The Ox	2 Recommendations Read Replies (1) \| Respond to of 3790

I am a little surprised that FB is trading below the $30/share level, where it was when I made the linked post. They have clearly shown the ability to grow revenue and had stated that they would need to increase spending in an effort to jump start the mobile based revenue streams. Now that mobile is starting to gain traction, the naysayers are pointing to PE as the area in which to justify the "too expensive" moniker. 9 months ago the question was could they grow revenue. They have answered that with a solid, yes. 6 months ago, the question was could they grow mobile revs. Once again, they have answered this with a solid, yes. Now they are being questioned about their ability to grow the earnings side. Of course, this will take a bit longer to answer, since increasing expenses in the short run was a necessity to quickly answer the last question. Yet even with the added costs, they've been able keep quarterly EPS steady. I don't expect the stock to rise quickly, as it still seems to be one of the investments the press loves to hate. In fact, it wouldn't be shocking to see another drop, since the stock had a nice run into earnings. I do think that the company has been doing a decent job of working toward their long term goals. Eventually, the street will also come to this realization, IMO.