Eight months ago FB was in the 60's. Eight months from now I expect it to be 90. I wouldn't call that a trading range.
So if N. American and European users really love the service, wouldn't the vast majority of them be willing to pay $1 a year?
To answer my own question, I just found this article from Nov. 2014:
WhatsApp will continue to offer its service for free to users in developing countries like India. Vice-president for business development Neeraj Arora stated that low debit and credit card penetration was the main reason for not collecting the $1 annual fee the service charges users in North America and Europe.
Speaking at the Indian School of Business in Hyderabad on Tuesday, Arora reiterated that monetization for the service would come from user subscriptions, and not advertisements.
"Monetization is in the cards. It will happen over the next few years. We believe in the subscription model and not in advertising as people do not like to have ads as they converse."
One way WhatsApp could charge users in the subcontinent is by tying up with carriers and collecting subscription charges from offline channels. WhatsApp already works with carriers in bundling data plans that do not charge users for the service, which has a user base of 70 million in the country.
I thought Whatsapp was only supposed to be free for a year, then users had to pay $1 annually. Even for someone in India or China, a dollar a year is nothing. If half their active users paid the annual fee, that would be hundreds of millions in revenue. Has that annual fee policy changed?
The Fed claimed today that U.S. household net worth has hit $83T. If you take that number and divide it by the number of households as of the end of 2014, it comes out to $709K per household. That can't posssibly be right, can it?
Earnings was only six weeks ago. How much does any stock move in six weeks? It's up 25% since the July low, and it's clearly been trending up since October. There aren't going to be any parabolic moves unless Whatsapp announces that it's going to charge $5 a year and most of its users agree to pay it.
FB is not stuck. It has been trending up since October. As I commented a few weeks ago, I think it will continue to hug the bottom of the trend line. I see it touching 90 in the fall.
I love it when people pull out the MySpace comparison. It's always good for a laugh. FB is going to do $17B in sales this year. Compare that with this blurb from a 2011 Bloomberg article:
At its December 2008 peak, Myspace attracted 75.9 million monthly unique visitors in the U.S., according to ComScore (SCOR). By May of this year that number had dropped to 34.8 million. Over the past two years, Myspace has lost, on average, more than a million U.S. users a month. Because Myspace makes nearly all its money from advertising, the exodus has a direct correlation to its revenue. In 2009 the site brought in $470 million in advertising dollars, according to EMarketer. In 2011, it's projected to generate $184 million.
There can't be any significant increase in interest rates because it will cripple the federal govt. Think about it - rates go up 2% and then the govt's short term debt rolls over. Now all of a sudden it has to pay an extra 2% on trillions of dollars. Where is that money going to come from when it's already running huge deficits? Everyone complains about how the Fed's policy has inflated stock prices and caused a massive wealth transfer from the middle class to the wealthy. And I agree that is a big problem (unless you're one of the wealthy). However I think the biggest fallout of the Fed's policy was that it enabled Washington to spend like drunken sailors because the money was perceived as being virtually free. Now the Fed has painted itself into a corner. I just don't see an exit strategy that won't end in pain for the entire country.
S&P may be due for yet another retest of the 150 DMA, which is currently 2014. That's been the line in the sand for a year now.As for FB, the bottom of the trading range is currently 77, so 76-77 is probably the low unless the market collapses.
You're right - technicals are not perfect. But then no other method is either. I've found them helpful in making my buy/sell decisions.
I agree. When I see people claiming '90 by next week' and '100 by summer', they're simply ignoring the technicals. I think FB will continue to grind along at the bottom of the trend line, which will be in the low 80's by summer.
Aside from potential advertising, what about the $1 per year to use the service? Will users flee rather than pay $1? If half stick around, that's $500M. And there are other ways to monetize besides ads.
Correct me if I'm wrong, but when the acquisition was made, didn't Zuck and the Whatsapp CEO state that Whatsapp revenue was not going to come from ads?
Yes, the most difficult thing to do when you're an investor (as opposed to a trader) is be patient. I used to make almost 100 trades a year. I realized that I was just #$%$ away money on commissions. Last year I made five trades. You are an owner in a company that you believe in. Instragram has just started to generate revenue and it's already valued at $35B. Whatsapp will soon have a billion users. People said Zuck was crazy to pay $17B for Whatsapp. When it starts generating revenue, what do you think its valuation will be? I'm not sure, but you can bet it will be more than $17B.
Looking at the chart and just going on gut instinct, I think we're going to get a move up by April. There is a really high frustration index on this board right now. The longs are getting impatient. I'll bet the stock makes a move when you least expect it.
I think earnings are being grossly underestimated, which is what is keeping the stock down. Current consensus is for only 12% growth this year (1.73 vs. 1.93). Even with the spending increases, which I don't think are going to be as massive as mgmt stated, earnings growth will still probably hit or exceed 20%. I'm not sure if mgmt intentionally did this to lower expectations. Whatever the case, I don't think the stock will run until investors are convinced that all of this spending will lead to a reacceleration of profits.