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Facebook, Inc. (FB) Message Board

  • investora2z investora2z May 12, 2013 7:56 AM Flag

    Inconsistent earnings

    Nearly one year after the listing and with several earnings declared during the period, the stock remains below the offer price. The net income has been erratic, and the stock based compensation is increasing all the time. It seems that the stock peaked even before listing. The popularity of the website was confused with the potential of the stock. Though one year is not long term, but at least the signs should start to get positive. The last earnings were good on a YoY basis, but sequentially the revenues had declined. The net income was good, but the lack of consistency in the past makes it difficult to get too confident. However, the strength of the brand can not be underestimated. The problem was the offer price. Perhaps the IPO was at a good time for the company but not for the investors. The company has hopes to make the mobile devices / apps / games ad revenue increase. That may take time to translate into better numbers. Hopefully, it will deliver at least a percentage of its potential so that the investors are rewarded. FB is known to be in talks to acquire mobile-driving application Waze (~ $1 billion deal). Waze is a crowd-sourced ad-supported driving application with close to 50 million users. Facebook is trying hard to make customers spend more time on its mobile apps so that the ad values increase. The future definitely belongs to mobile devices, but the change in fundamentals will take time. In addition, there are patent infringement lawsuits hanging around with Facebook as defendant in some. Marathon Patents Group (MARA) recently filed two new patent infringement lawsuits against several companies like HP, Cisco, Alcatel in addition the previous lawsuits against Sony, Dell, Siemens etc. For Facebook, some consistency in earnings will be great.

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