Best of the Week
Most Popular
1.The Trump Reset, US Empire's Coming Economic, Cyber and Military War With China (2/2) - Nadeem_Walayat
2.Now Is the Time to Buy Gold - 5th Jan 17 - John Grandits
3.CIA Planning Rogue President Donald Trump Assassination? Elites "Manchurian Candidate" Plan B - Nadeem_Walayat
4.The Trump Reset - Regime Change, Russia the Over Hyped Fake News SuperPower (Part1) - Nadeem_Walayat
5.Most Popular Financial Markets Analysis of 2016 - Stock Market Crash Postponed Again - Nadeem_Walayat
6.No UK House Prices Brexit Crash 2016 Despite London Weakness, Forecast 2017 - Nadeem_Walayat
7.President Trump Understands the NSA, CIA... LIE, America's Intelligence Agencies Crime Syndicate! -Nadeem_Walayat
8.President Donald Trump's 2017 New Year Message, BBC Fake News, Was 2016 a Dream? - Nadeem_Walayat
9.Major Stocks Bear Market Still Looms - Zeal_LLC
10.Biased 2017 Forecasts - Debt, Housing and Stock Market (1/2) - James_Quinn
Last 7 days
The Story of the U.S. Regime Change Plan in the Philippines - 16th Jan 17
Gold Price 2017 Trending Towards $1375 as Forecast - 16th Jan 17
'Deep State' CIA Director States We are Not NAZI's, Warns Trump Does Not Understand Russian Threat - 15th Jan 17
UK House Prices Forecast 2017 - Crash or Bull Market? - Video - 15th Jan 17
SPX Stocks Bull Market Update - 14th Jan 17
President Trump vs the Deep State that Hides in Plain Sight - 14th Jan 17
The Impact of Sir Alex Ferguson's Retirement on Man United's Share Price - 14th Jan 17
What Can Stock Market Tell You About Politics? - 13th Jan 17
Big Gold Buying Coming 2017 - 13th Jan 17
A Bullish Case for Gold 2017 - 13th Jan 17
Will Stocks Bull Market Continue to Charge or is it Time to Sell the News - 13th Jan 17
Gold and Silver Off To Shining Start to 2017 - 13th Jan 17
Gold’s Fundamental Outlook for 2017 - 13th Jan 17
Is trading stocks and shares just as luck-based as roulette? - 13th Jan 17
Trump CIA Like Nazi Germany - Fake MI6 Intelligence leaked to Fake News Mainstream Media - 13th Jan 17
USD in Decline. SPX and TNX May Follow - 12th Jan 17
CIA War On Trump - Leaks Fake MI6 Intelligence to Fake News Broadcast Media - 12th Jan 17
Registered Address.co.uk London Business Registered Office Address Mail Forwarding Review - 11th Jan 17
13 Contrarian Economic Predictions For 2017 - 11th Jan 17
10 Potential Black Swans and Opportunities for the US Economy in 2017 - 11th Jan 17
How to Get a Bird of Paradise Plant to Flower - UK Growing Video - 11th Jan 17
The No.1 Energy Stock To Buy Right Now - 10th Jan 17
Frank Holmes: Gold Rally Extremely Likely in January and February - 9th Jan 17
Test Your Markets Trading Knowledge: Find the Clear Wave Pattern on this Chart - 9th Jan 17
Markets 2016 Past is 2017 Prologue - 9th Jan 17
Stock Market Major Indexes Reached New Record Highs - But Will They Continue Higher? - 9th Jan 17
Agri-Stocks and Agri-Food Prices: Both Strong - 9th Jan 17
The Two Hottest Commodities For Investors In 2017 - 9th Jan 17
Gold Price US$700? OR US$7000? - 9th Jan 17
Stock Market Tad More Distribution Needed - 9th Jan 17

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

What Can Stock Market Tell You About Politics?

Facebook Stock Earnings Downgrades Keep Pouring In

Companies / Tech Stocks Jan 31, 2013 - 07:52 PM GMT

By: Money_Morning

Companies

Diane Alter writes: They say third time's the charm, but no such luck for Facebook stock, which fell even though the company's third earnings report since going public beat expectations.

The numbers failed to charm Facebook Inc. (Nasdaq: FB) investors who expected the report would offer more to like, and analysis who found plenty of concern in the expenses.


The social networking giant posted earnings per share of 17 cents, better than the consensus of 15 cents. Revenue came in at $1.59 billion, up 40% year over year, and ahead of forecasts for $1.53 billion. However, fourth quarter profit slumped 79%, dragged down by higher costs.

The Menlo Park, CA-based company's advertising business grew at its quickest pace since before the company's initial public offering (IPO) on May 18, 2012, and contributed to the robust revenue growth.

Revenue growth has been a major concern among investors since the initial public offering, leaving them to question if the company can make money off its massive 1 billion members.

Immediately following the Q4 earnings release after the close Wednesday, shares slumped more than 9%. Shares ended the volatile after-hours session down some 4% at $29.98. The sell off continued Thursday with FB shares down 3.52 % in early morning trading.

Shares had gained some 60% since November, but it looks like the Facebook stock rally for now may be over.

A Deluge of Facebook Stock Downgrades
A number of analysts grew cautious after the company announced it will increase spending this year on a cache of new initiatives, with heavy focus on improving mobile experiences for Facebook users. Concerns are that a heavy spending spree on research and development will cut into profit margins.

■Jefferies Group Inc. ( NYSE: JEF) analysts Brian Pitz and Brian Fitzgerald trimmed their rating on Facebook to a "Hold" from a "Buy," and in a research note wrote, "We are downgrading...as management warns of significantly higher expense levels in 2013 as a result of aggressive hiring and investment plans. While we are broadly supportive of Facebook's longer-term strategy, the material increase in 2013 spending pressures valuation, making the stock less attractive to own on a near term basis, in our opinion." The duo reduced their price target on shares to $30 from $32.
■Citigroup Inc.'s (NYSE: C) Neil Doshi slashed his rating on FB from a "Buy" to a "Neutral." The analyst wrote, "We view FB as a core long-term "net stock.' But with plans to invest heavily in the biz in 2013, and little expected contribution from new initiatives like Gifts or Graph Search, we don't see any near term catalysts for the stock. And Mobile Ads appear to be cannibalizing Desktop, which further concerns us."
■BMO Capital (NYSE: BMO) analyst Daniel Salmon lowered his rating to "Market Perform" from "Outperform." His target is $32.
■Stifel Nicolaus (NYSE: SF) analyst Jordan Rohan cut his rating from a "Buy" to a "Hold" citing concerns about compression from recent investments and potentially reduced growth prospects from some initiatives, like Gifts.
■Cowen Group Inc.'s (Nasdaq: COWN) John Blackledge maintained his "Neutral" rating, but lowered estimates "to reflect lower expected desktop and mobile advertising revenue and higher expected costs largely in 2013."

The Biggest Concern of those Investing in Facebook
In attempts to reclaim its position as a $100 billion company, Facebook has been moving quickly on its mission of morphing into a truly mobile business, a transition that began in earnest mid-2012. The social network behemoth kicked-up its online advertising services over the past several months, with a greater emphasis on mobile ads.

Mobile business accounted for 23% of total ad revenue in the fourth quarter, up from 14% in the third.

Mobile monthly active users totaled 680 million, a 57% increase over last year. The surge in mobile users highlights Facebook's urgency to monetize its growing member count in this explosive arena.

Facebook's app is the most popular in the United States, accounting for an impressive 23% of all U.S. app use. The social network also held the top spot in the U.S. in mobile display advertising revenue in 2012, with 18.4% of the market, eMarketer reports.

But that popularity and No. 1 position comes with a price and a predicament.

Mobile advertising doesn't generate as much money as ads that pop-up on PCs and laptops. In addition, garnering user attention on a much smaller screen is difficult.

In a world that is always plugged-in, online and on call, Facebook's challenges of keeping users engaged without turning them off with a deluge of ads is a daunting task, one that will be a concern of those investing in Facebook this year.

Source :http://moneymorning.com/2013/01/31/facebook-stock-downgrades-keep-pouring-in/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife