I think investors are way too much over reacting on this. This concept of watching quarterly results every quarter will eventually hurt them only.. at least in this case.. or may be benefit them by letting them buy FB dirt cheap now..
You have to understand one thing, Facebook controls biggest and most significant and most strategic information about consumers. There is no denying about it. Even Google or any other company doesn't have that detailed and accurate information about customers. FB just needs to figure out how and where to use this power properly without annoying there very customer as well sourcing base of this immense wealth. Nobody can do better or more accurate advertising than FB. However, they have not been able to do it properly or I should say, show it off to investors. FB's privacy policies are always in news.. Let us see what they come up with now.. Pressure is high, my hope is that they won't try to squeeze their user base with something totally ridiculous policy change or something like that.
Having said that, I don't know the fact that how much of it is already analysts have taken into account. In my view, FB pricing was based on this fact only, but subsequently they were not able to keep this idea in brains of analysts and investors.
All this Zynga fallout etc.. is non-sense. It was a very small piece of the pie for FB any how. In long term, this Zynga shinga is not going to matter for FB. This will definitely matter in Quarter to Quarter earnings and that is one reason, I really don't like them and definitely won't react much to them. They do indicate your operational health but that is very very tactical and unless totally botched, they are not going to impact long term growth of the company.
Final disclaimer, I don't have FB stock neither do I have any plans to acquire or short them in any short/medium term.
Adding to investor worries is the bombshell dropped Wednesday by Zynga, the online gaming company whose business is closely tied to Facebook. Zynga’s stock fell nearly 40 percent over two days, closing Friday at $3.09, after the company reported earnings far short of estimates and lowered its forecast for the year.
Facebook executives did not speak directly about Zynga’s troubles during a conference call Thursday, but they reported that Facebook saw virtually no growth over the past three quarters in its revenue from fees for processing online payments.
Zynga’s games are a major source of those Facebook fees, although Facebook recently introduced a new online “App Center” that’s expected to help diversify its revenue base by helping users find games and apps from other developers besides Zynga.
Analysts generally gave good marks to Facebook CEO Mark Zuckerberg for his presentation during the company’s conference call Thursday. The 29-year-old company co-founder answered questions and outlined the company’s strategy for increasing revenue by developing new forms of mobile advertising and by serving as a platform for other companies to base a variety of online businesses. But as Facebook seeks to build its own business, the company is increasing its spending on hiring, marketing, research and facilities. That drove the company’s operating margin, a measure of profitability, down to 43 percent from 53 percent a year ago.
Chief Financial Officer David Ebersman reported the company has grown from 3,200 employees to nearly 4,000 in the past six months. “At this early stage of our growth,” he told analysts, the company is focused on “investment” to expand rather than on managing its costs.
Ebersman declined to give a revenue forecast for future quarters, but he warned analysts that spending will grow even more in the second half of 2012. That worries many investors, according to Macquarie Securities analyst Ben Schachter, who blamed “a general unease about revenue visibility” among reasons for the plunging stock price.
Also in the back of shareholders’ minds, Schachter said in a research note, is the looming expiration of a regulatory “lockup period” that barred employees and early investors from selling stock. If enough of those shares go on the market next month, that could drive the price down further.
The value of Facebook shares has fallen 38 percent since the company’s initial public offering, when the stock was priced at $38. Estimates of the company’s total market value vary according to the number of shares used to calculate the value.
As the company’s biggest shareholder, Zuckerberg saw the value of his holdings drop more than $2.8 billion in the past two days, although his 503.6 million shares are still worth nearly $12 billion.
Analysts who are bullish about Facebook said its falling stock price represents a buying opportunity for new investors. Needham’s Laura Martin argued in a report Friday that Facebook has enormous potential to increase its revenue from advertising and e-commerce — in part because the social network is heavily used by women, who Martin said have more influence over consumer purchasing than men.
But analyst Trip Chowdhry of Global Equities Research, who has consistently criticized Facebook for setting its IPO price too high, advised investors to “remain on the sidelines for now.”
Contact Brandon Bailey at 408-920-5022; follow him at Twitter.com/ BrandonBailey.
You have to understand one thing, Facebook controls biggest and most significant and most strategic information about consumers. There is no denying about it. Even Google or any other company doesn't have that detailed and accurate information about customers. FB just needs to figure out how and where to use this power properly without annoying there very customer as well sourcing base of this immense wealth. Nobody can do better or more accurate advertising than FB. However, they have not been able to do it properly or I should say, show it off to investors. FB's privacy policies are always in news.. Let us see what they come up with now.. Pressure is high, my hope is that they won't try to squeeze their user base with something totally ridiculous policy change or something like that.
Having said that, I don't know the fact that how much of it is already analysts have taken into account. In my view, FB pricing was based on this fact only, but subsequently they were not able to keep this idea in brains of analysts and investors.
All this Zynga fallout etc.. is non-sense. It was a very small piece of the pie for FB any how. In long term, this Zynga shinga is not going to matter for FB. This will definitely matter in Quarter to Quarter earnings and that is one reason, I really don't like them and definitely won't react much to them. They do indicate your operational health but that is very very tactical and unless totally botched, they are not going to impact long term growth of the company.
Final disclaimer, I don't have FB stock neither do I have any plans to acquire or short them in any short/medium term.
COMPANY HURT BY EARNINGS, ZYNGA FALLOUT
Investors pummel Facebook
Social media giant’s bad week ends with 12 percent drop in stock
By Brandon Bailey
bbailey@mercurynews.com
MENLO PARK — Facebook continued taking a pounding on Wall Street Friday, as its stock price hit a new low, wiping out billions in shareholder value after a week of bad news for the social networking giant.
Facebook’s market value is now close to half the record $104 billion valuation that the company set when it began selling shares in May. Other social media companies are also struggling, despite early excitement over what was expected to be a new “hot” industry. Zynga, Pandora and Groupon are all trading far below their initial public offering price.
Shares in Facebook fell 12 percent on Friday, closing at $23.70, after heavy trading in the wake of an earnings report Thursday that showed the company’s revenue growth is slowing. While some Wall Street analysts stood by their earlier conclusions that Facebook has significant earnings potential, they said investors are worried about rising operating costs and the company’s unwillingness to predict future revenue.
“We acknowledge that it is difficult to determine the true value of Facebook,” Wedbush Securities analyst Michael Pachter wrote in a note to investors Friday. Although he said he expects Facebook’s business to grow, Pachter said this week’s earnings report, coming after the company’s “messy” stock market debut in May, “will likely keep some investors away from the stock.”
Investors pummel Facebook
Social media giant’s bad week ends with 12 percent drop in stock
By Brandon Bailey
bbailey@mercurynews.com
MENLO PARK — Facebook continued taking a pounding on Wall Street Friday, as its stock price hit a new low, wiping out billions in shareholder value after a week of bad news for the social networking giant.
Facebook’s market value is now close to half the record $104 billion valuation that the company set when it began selling shares in May. Other social media companies are also struggling, despite early excitement over what was expected to be a new “hot” industry. Zynga, Pandora and Groupon are all trading far below their initial public offering price.
Shares in Facebook fell 12 percent on Friday, closing at $23.70, after heavy trading in the wake of an earnings report Thursday that showed the company’s revenue growth is slowing. While some Wall Street analysts stood by their earlier conclusions that Facebook has significant earnings potential, they said investors are worried about rising operating costs and the company’s unwillingness to predict future revenue.
“We acknowledge that it is difficult to determine the true value of Facebook,” Wedbush Securities analyst Michael Pachter wrote in a note to investors Friday. Although he said he expects Facebook’s business to grow, Pachter said this week’s earnings report, coming after the company’s “messy” stock market debut in May, “will likely keep some investors away from the stock.”
Adding to investor worries is the bombshell dropped Wednesday by Zynga, the online gaming company whose business is closely tied to Facebook. Zynga’s stock fell nearly 40 percent over two days, closing Friday at $3.09, after the company reported earnings far short of estimates and lowered its forecast for the year.
Facebook executives did not speak directly about Zynga’s troubles during a conference call Thursday, but they reported that Facebook saw virtually no growth over the past three quarters in its revenue from fees for processing online payments.
Zynga’s games are a major source of those Facebook fees, although Facebook recently introduced a new online “App Center” that’s expected to help diversify its revenue base by helping users find games and apps from other developers besides Zynga.
Analysts generally gave good marks to Facebook CEO Mark Zuckerberg for his presentation during the company’s conference call Thursday. The 29-year-old company co-founder answered questions and outlined the company’s strategy for increasing revenue by developing new forms of mobile advertising and by serving as a platform for other companies to base a variety of online businesses. But as Facebook seeks to build its own business, the company is increasing its spending on hiring, marketing, research and facilities. That drove the company’s operating margin, a measure of profitability, down to 43 percent from 53 percent a year ago.
Chief Financial Officer David Ebersman reported the company has grown from 3,200 employees to nearly 4,000 in the past six months. “At this early stage of our growth,” he told analysts, the company is focused on “investment” to expand rather than on managing its costs.
Ebersman declined to give a revenue forecast for future quarters, but he warned analysts that spending will grow even more in the second half of 2012. That worries many investors, according to Macquarie Securities analyst Ben Schachter, who blamed “a general unease about revenue visibility” among reasons for the plunging stock price.
Also in the back of shareholders’ minds, Schachter said in a research note, is the looming expiration of a regulatory “lockup period” that barred employees and early investors from selling stock. If enough of those shares go on the market next month, that could drive the price down further.
The value of Facebook shares has fallen 38 percent since the company’s initial public offering, when the stock was priced at $38. Estimates of the company’s total market value vary according to the number of shares used to calculate the value.
As the company’s biggest shareholder, Zuckerberg saw the value of his holdings drop more than $2.8 billion in the past two days, although his 503.6 million shares are still worth nearly $12 billion.
Analysts who are bullish about Facebook said its falling stock price represents a buying opportunity for new investors. Needham’s Laura Martin argued in a report Friday that Facebook has enormous potential to increase its revenue from advertising and e-commerce — in part because the social network is heavily used by women, who Martin said have more influence over consumer purchasing than men.
But analyst Trip Chowdhry of Global Equities Research, who has consistently criticized Facebook for setting its IPO price too high, advised investors to “remain on the sidelines for now.”
Contact Brandon Bailey at 408-920-5022; follow him at Twitter.com/ BrandonBailey.
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