Financial Trading Blog
Stock of the day 30/10/2015 – Facebook Inc
Where Twitter has faltered in expanding its core base, its older, wiser, more successful sibling has somehow managed to increase its users on a consistent basis for the past few quarters, despite seemingly everyone in the world already being part of the blue-bannered site.
In terms of the figures that would normally ensure any other company soared, Facebook’s second quarter revenue increased 39% year-on-year to a better than expected $4.04 billion, whilst seeing a similarly strong $0.50 earnings per share. Things were more mixed, however, with the nitty gritty of Facebook’s all-important user growth figures. A 17% increase in daily active users to 968 million was a smidgen (well, 2.5 million) lower than forecasts, whilst monthly active users bested expectations to come in at 1.49 billion.
(Source: IT-Finance.com 30/10/2015)
Beyond pure new-user grabbing Facebook’s focus remained on its mobile division, a sector responsible for 76% of the company’s advertising revenue. And with mobile monthly active users up to 1.31 billion (from the aforementioned 1.49 billion total) that area continues to be the company’s main driver of growth, and is arguably the most important (alongside daily mobile active users) figure to look at ahead in the cavalcade of numbers Facebook will release next Wednesday.
This overall positive update at the end of July actually took Facebook away from the $99.29 all-time high it had hit just a week before, eventually grazing a year-nadir of $72.26 on Black Monday. However, Facebook has seen a remarkable recovery since then, and bar a minor blip at the end of September, has risen to a new record price of $104.70 (It-Finance.com, 30/10/2015).
Looking to its Q3 results and analysts are expecting a 30% rise in earnings per share to $0.52 alongside a 36% increase in revenue to $4.37 billion, with online video ad revenue joining mobile user growth as one of the key metrics for the success of Facebook’s post-report performance.
Facebook Inc has a consensus rating of ‘Buy’ with an average target price of $109.95.
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