Facebook - Profits up, Margins down


Picture this cricketing scenario. You are chasing 300 runs and your team is already 100/4. Your 6th batsmen, who is horribly out of form, comes in to try and save the day. After a shaky start, he finds his feet and comes through with a cracking century off 60 balls and saves the day. That is what it was like when Facebook released their results on Tuesday. Facebook, of course, were batting for team Tech. Amazon, Netflix and Google had gone out cheaply (although Netflix put up a brave fight). Fortunately, Facebook beat expectations and the share price shot up 5% premarket.


Facebook Flying


Facebook stock has been quite weak lately. If you look at the two year chart below, you can see that it peaks at $210 a share in July 2018, and has slipped steadily since then, to $154 at the close last Friday. What gives?


Facebook growth opportunity


I recently read a Seeking Alpha blog post, where the author did a Discounted Cash Flow (DCF) on Facebook. He concluded that Facebook is currently undervalued by 40%. The forecast is that in the coming years, Facebook will more than triple its revenue to over $150 billion.


Facebook takes Wifi to EM


Capitalism often results in very positive outcomes for mankind, even though the company itself is looking after its own interests. A great example of this is how Facebook want the whole world to be connected. The more people who have access to the internet the more users they can get. And of course, access to the internet is the ultimate leveller.


Facebook cracks down on bad accounts


Facebook announced two days ago that it had found some irregular accounts on its platform mimicking the same behaviour as the accounts that tried to influence US elections in 2016. The company doesn't know exactly where the accounts are from but says the activity is similar to those of known Russian state funded hacker groups.


Facebook is not a bubble


There has been much talk about Facebook, and it's recent fall in share price. To the untrained eye, this may look like a bubble pop that could continue to get worse. But I strongly disagree. Facebook has one critical thing that many bubbles do not possess. An incredibly profitable business.


Facebook 2Q - Missed on growth expectations


Facebook shares plunged as much as 24 percent in after-hours trading because it missed estimates for both revenue and daily users, and said it'll get worse.


Instagram teaches people to make money


I know we have been talking about Instagram a lot lately but this article was too good not to share. It is titled How to Make Piles of Money Using Instagram. It talks about these specific Instagram classes which are set up by Facebook to teach people how to best utilise the app.




Last week Wednesday, Instagram announced a new upgrade for the app which now includes a long-format of video called "IGTV" with its icon right next to the DMs icon on the top right of the screen. Here in Mzansi you would've noticed the update on Friday and if you haven't updated your app by now, you're totally missing out on some cool content.


Facebook 1Q - growing margins


Last week, before all the public holidays, Facebook released their first quarter numbers which are their first since the data sharing scandal broke. These numbers only contain 2-weeks of post-scandal data; we will have to wait another quarter to see if there was any significant fallout from the scandal. Having a look at their numbers and reading the earnings call with investors afterwards, there was very little impact on user numbers. The bigger impact will be seen in costs associated with making data more secure, and having more stringent requirements for advertisers.


Facebook FY numbers - slower growth


Facebook had a stellar 2017 year when it comes to earnings as they have managed to beat expectations relentlessly without fail. Here's is what the Zuck had to say about the year:


FB 3Q - Strong Growth


In his book, Prof. Scott Galloway mention's the fact that Facebook owns three of the five platforms that got to 100 Million Active Users the fastest, i.e. Facebook, WhatsApp and Instagram. People laughed at the Instagram purchase. Instagram was bought for $1 Billion and everyone and their dog second guessed it. Fast forward to today, it's worth between $60-$100bn in most traditional valuation metrics. Probably one of the best acquisitions in tech in the past 20 years. Instagram is all about the double V's; the visuals and vanity which millennials love so much! This was a big bold bet, and Zuckerberg and team kept the growth going, maintained passion among millennials, it's been a fantastic acquisition.


Facebook 2Q numbers - profits up 71%


It is still a phenomenal story, the growth of Facebook from a dormitory, nearly 13 and a half years ago now. The date most people take as the launch of what is now a sprawling network is 4 February 2004. I had been sitting in my Vestact chair for a little over a year. A few Harvard mates (led by the Zuck) created a platform, before the launch of thefacebook.com, which originally was for connecting people through social networks at colleges. The likes of Berkley, Chicago, Columbia, Cornell, really an Ivy League connection tool.


Facebook 1Q numbers - monster top line growth


Facebook has changed the ways that we communicate with one another. Perhaps the improvements in hardware, handheld mostly, has given platforms like Facebook/Messenger, Instagram and WhatsApp the ability to grow sharply. If the front and very important back cameras and delivery mechanism to the internet (Wifi and LTE - 5G nearing) did not exist, we wouldn't be able to share our thoughts, pictures and experiences immediately. It must be far harder to make important decisions as a teen and in the early stages of adulthood when there are all these platforms around. At the same time, it has never been easier to stay in touch with one another than at any other stage in humanity.


Facebook FY & 4Q numbers - better than expected


Facebook reported numbers after hours, for the full year and the fourth quarter. Another beat on both metrics, revenues income - Facebook Reports Fourth Quarter and Full Year 2016 Results. Revenues for the full year clocked 27,638 billion Dollars, an increase of 54 percent from last year. Wow. Net income for the full year topped 10 billion Dollars, up 177 percent from the year prior.


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