July 24, 2013
Facebook(FB) reported its quarterly
earnings report after hours today, with revenue rising over 50%! Its quarterly
revenue came in at $1.813 billion, topping the Wall Street average estimate by
$195 million. The company earned over $300 million this quarter, as opposed to
the same period last year where the company faced a net loss. These numbers
were surprising due to the fact that rivals Google and Yahoo recently reported
disappointing revenue and outlooks this week. FB rallied nearly 20% after
hours, rising from its close of $26.5 to $31. Mobile ad revenue grew strongly
this quarter, rising to equal over 40% of the company’s ad revenue. This is up
10% from the previous quarter. Even though the company has faced rapid growth
in mobile ads, Google still dominates with approximately a 50% market share of
the nearly $9 billion market.
Facebook
has experienced a surge in usage, with nearly 700 million people using the
website on a regular basis. This is a sharp rise from last year, when there
were only 666.5 million regular users. As Facebook's user-base increases, so
does its revenue from ads. Even with competition from startups, Facebook
managed to increase mobile advertising revenue by 76 percent. The company has
worked on increasing the number and types of advertisements, while maintaining
the CPC value (cost-per-click). New ads that are present within users' feeds
are being noticed, which has led to increasing clicking and more profit for
Facebook. Users have
complained to CEO Mark Zuckerberg about the presence of these ads, and he has
stated that his company will strive to improve their quality so that they are
more aesthetically pleasing.
Facebook still faces stiff competition
from smaller rivals and start-ups that are quickly gaining ground in the mobile
advertising market. WhatsApp is a company that operates a "cross-platform
mobile messaging app" that is available on Windows, Android, IOS, and
Blackberry. It has shot up to be the #1 downloaded app on many of these
platforms, gaining millions of users. Though this poses no immediate threat to
Facebook, it shows the potential of smaller rivals to quickly gain market share
in an online world. Blackberry has also released news that it plans on
expanding the presence of Blackberry Messenger, or BBM, so that it is available
on all platforms. BBM currently has tens of millions of active users daily, and
opening the option to IOS and Android users would help it grow exponentially.
This could very well put a dent into Facebook's revenue once it is released.
Sources:
http://finance.yahoo.com/
Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk.
Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk.
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