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Facebook Shares Soar 15% After Hours … Then Give It All Back

| October 30, 2013
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Update: Facebook shares are were soaring after-hours on the heels of the company’s third-quarter earnings release. The update: Unbelievably the stock rose about 15 percent after the expectations-beating numbers came out, then came tumbling down, dipping into the red.

So what happened? Here’s the take from AllThingsD:

Making money from mobile users — once considered a grim prospect for the social giant — has come faster than many could have anticipated; mobile revenues now account for nearly half of all ad revenues for the company. Growth is also up across the board in terms of user numbers.

Alas, that happiness was short-lived; after the stock skyrocketed 12 percent in after-hours trading to top more than $55, shares took a nosedive on the news that the company saw “a decrease in daily users — specifically among younger teens,” in its estimates. In mere minutes, the stock lost nearly $18 billion in market value.

While that’s certainly a problem the company has to solve, most of the call was fairly good news — ARPU is up, CapEx is down and mobile is humming along nice and smoothly.

Another take from Reuters:

In July, Facebook said it was showing one ad per 20 stories in the newsfeed, but Chief Financial Officer David Ebersman told analysts Wednesday that the current ratio, although slightly higher than 5 percent, would not increase much more going forward … Ebersman’s comments, combined with remarks suggesting that young teenage users in the U.S. were beginning to use Facebook less frequently, soured the mood abruptly …

MarketWatch live-blogged Facebook’s conference call. Excerpts from their blow-by-blow:

2:02 p.m. Earnings call starting. Stock up 10%. Mark Zuckerberg, Sheryl Sandberg on the call

2:12 p.m. Chief Operating Officer Sheryl Sandberg now discussing financials. Stock up 8%.

2:25 p.m. [CFO David] Ebersman says Facebook does not expect to “significantly increase ads as a percentage of newsfeed stories beyond where we were at the end of Q3.”

2:26 p.m. Q&A starts. Stock now up 5%.

2:33 p.m. Stock has surrendered some gains, now up just 2.5%. Topeka’s Victor Anthony tells MarketWatch it was probably the comment on a decline in daily usage among younger teens.

2:37 p.m. The comment from Ebersman about not increasing frequency of newsfeed ads may have spooked some investors, another analysts says.

2:39 p.m. Stock is now just up 1%.

2:53 p.m. Facebook shares turn negative.

2:59 p.m. Facebook’s 14% after-hours stock gain: Gone. Could be comment on declining youth user growth or on caution in ramping up newsfeed ads.

Earlier

Numbers from MarketWatch and the Wall Street Journal:

Facebook Q3 adjusted EPS 25 cents vs. 19c expected

Facebook Q3 revs $2.02B vs. $1.9B expected

Daily active users 728 million, up from 699 million last quarter and 584 million a year ago

Mobile monthly active users 874 million, up from 819 a quarter ago and 604 million a year ago

Revenue from advertising $1.8 billion. Mobile revenue is 49% of that — up from $1.6 billion and 41% last quarter.

Complete earnings report here.

Live blog from the Wall Street Journal.

Original post

Facebook is set to announce third-quarter earnings after the bell at 1 p.m. PT. Shares are up more than 50 percent since its last report in July, and investors no doubt are hoping for more based on today’s numbers. Some things to look for, all concerning mobile, mobile, mobile …

  • Facebook Earnings: What to Watch (Wall Street Journal)

    Mobile advertising grew to 41% of Facebook’s revenue in the second quarter, from 30% in the first quarter. Some analysts, though, questioned whether mobile advertising represented a truly new stream of revenue, or was simply being diverted from desktop advertising.

    “It’s not advertisers saying ‘I must have mobile,’” said Brian Wieser, an analyst at Pivotal Group. He wants more details on how Facebook breaks out and calculates mobile advertising. Facebook declined to comment.

  • Facebook earnings report will hinge on mobile (SF Chronicle)

    (T)he bigger revenue story down the line might be its Instagram mobile photo-sharing app, which is only beginning to experiment with ads.

    “Instagram definitely gives them that lift from mobile because it’s a more native platform to advertise on” than the main Facebook app, said Craig Elimeliah, vice president and director of creative technology at digital marketing agency Rapp.

  • Here’s The Number Google Should Worry About When Facebook Reports Its Earnings Tomorrow (Business Insider)

    There’s one number that Google sales boss Nikesh Arora should be on the lookout for: the number of mobile app developers who bought Facebook ads promoting their apps.

    Facebook has an mobile ad product where app developers pay Facebook every time a user installs their app.

    In the first quarter, 3,800 developers bought install apps. In the second quarter, the number increased to 8400. This quarter, the number could hit 20,000 or more. That number’s rapid growth signifies how, as personal computing shifts from desktop to mobile, Google’s position as the way for consumers to discovers businesses through the Internet is weakening.

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