Best of the Week
Most Popular
1.Is the Stocks Bull Market Over? Dow Trend Forecast into End January 2015 - Nadeem_Walayat
2.Gold and Silver Stocks Apocalypse Now, Bear Market Review - Rambus_Chartology
3.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
4.Ebola Terror Threat Suicide Bio-Weapons Threatens Multiple 9/11's, Global Plague - Nadeem_Walayat
5.Second-Richest Man Says Mortgages Now a "No Brainer" - Dr. Steve Sjuggerud
6.Gold And Silver Still No End In Sight - Michael_Noonan
7.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
8.The Gold Bug is Set to Bite Back - EWI
9.How Alibaba Could Capitalize on the EBay-PayPal Split - Frank_Holmes
10.The Consequences of the Economic Peace - John_Mauldin
Last 5 days
Bullish Silver Stealth Buying - 24th Oct 14
Blood in the Streets to Create the Gold Stocks Investor Opportunity of the Decade - 24th Oct 14
Swiss ‘Yes’ and ‘No’ Gold Initiative Campaigns Compete at Launches in Bern - 24th Oct 14
War And The Law Of Unintended Consequences - 24th Oct 14
Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - 24th Oct 14
Saudi Move to Cut Oil Prices Is Now Russia's Biggest Economic Threat - 24th Oct 14
US Stock Market Top Is Now In Sight - 24th Oct 14
New Profit Points in the Shifting Balance of Power, Welcome to Saudi America - 24th Oct 14
QE Failure & Folly Of Paper Mache, Treasury Bond Integrated Lifeline Patches - 24th Oct 14
U.S. Economy Faltering Momentum, Debt and Asset Bubbles - 23rd Oct 14
Annuities - Afraid Your Money Will Vanish before You Do? - 23rd Oct 14
What Debt Deleveraging? - 23rd Oct 14
How to Profit from Massive Spin-Offs with Just One Play - 23rd Oct 14
Evaluating Ebola as a Biological Weapon - 23rd Oct 14
Euro, USD, Gold and Stocks According to Chartology - 23rd Oct 14
Why You Should Always Be Invested in the Stock Market (Even Now) - 23rd Oct 14
Five U.S. Housing Market Warning Signs Point to Real Estate Market Downturn - 23rd Oct 14
The Better Short: Gold or Silver? - 23rd Oct 14
Focus on Graphite Companies with Green Energy and Technology Strategies - 22nd Oct 14
Crude Oil Price Hitting Bottom - 22nd Oct 14
Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - 22nd Oct 14
Gold Or Crushing Paper Debt Stocks Crash? - 22nd Oct 14
India Gold Demand Surges 450% and Bank of Russia Demand At 15 Year High - 22nd Oct 14
Bitcoin Stock Exchange Could Be "More Valuable than Alibaba" - 22nd Oct 14
Currency War - How to Profit from a Stronger U.S. Dollar - 22nd Oct 14
Banks Hold Treasuries and Make Loans- 22nd Oct 14
Gold and Silver Timing is Everything - 22nd Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VII) - 22nd Oct 14
Follow the Baby Boom to Biotech Stock Profits - 22nd Oct 14
Copper, Nickel and Zinc Won't Be Cheap for Long - 22nd Oct 14
How Will We Know That the Gold & Silver Price Bottom Is In? - 21st Oct 14
Is Gold as Dead as Florida Hurricanes? - 21st Oct 14
First Swiss Gold Poll Shows Pro-Gold Side In Lead At 45% - 21st Oct 14
The Similarities Between Germany and China - 21st Oct 14
The REAL Reason Why the Stock Market Turned Down - 21st Oct 14
Petrobras is a 'Scheme, Not a Stock' - 21st Oct 14
Stocks Bear Market Indicator Is Off the Mark - 20th Oct 14
Stock Market Ideal Turning Point is at Hand - 20th Oct 14
Investors Quit Complaining, The Environment is Perfect Right Now - 20th Oct 14
Ebola Armageddon Could Trigger a Rebirth in Gold and Silver Prices - 20th Oct 14
Gold vs Euro Risk Due To Possible Return of Italian Lira - Drachmas, Escudos, Pesetas and Punts? - 20th Oct 14
Stocks Rebounded Following Recent Sell-Off, But Will It Last? - 20th Oct 14
U.S. Responsible for West Africa Ebola Outbreak Says Liberian Scientist - 20th Oct 14
Stock Market Intermediate B Wave has Started - 20th Oct 14
Gold Stocks Analysis – FNV, CG, NCM, SBM - 19th Oct 14
Stock Market Primary IV Wave Counter Trend Rally - 19th Oct 14
Gold And Silver - Financial World: House Of Cards Built On Sand - 18th Oct 14
Anatomy of a Stock Market Sell-Off - 18th Oct 14
Why OPEC Has Declared an Oil War on Russia - 18th Oct 14
Gold and Silver Extreme Shorting Peaks - 18th Oct 14
Bitcoin Price Fall to $350? - 18th Oct 14
Tesco Supermarket Crisis Worse To Come as Customers Vanish! - 18th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

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

© 2005-2014 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

Free Report - Financial Markets 2014