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Friday, November 1, 2013

$fb to focus the ads

One of the more interesting take aways from Facebook's blowout was the acknowledgement that an increased level of ads played a role in the strong performance. This explained the blowout, and also shows the power of their ability to leverage their properties. Management then proceeded to tell investors they will ease up on the level of ads, and focus on ad quality.

This puts the focus on Facebook's ability for organic growth-per-current ad site. Can Facebook maintain the acceleration, while it removed an earnings lever? (Looks like they have plenty of leverage in their tax rate *like Google*, to manipulate. FB tax rate was 41%!)

Below is q-to-q revenue growth rate.

Regardless to the perception, as a business, we saw a more dynamic Facebook this quarter. Setting itself up well as more ads become programmable and utilizing real-time bidding. Facebook Exchange will really shine over the next few years, and the incorporation to mobile streamlines the process for marketers. 

What's good for the company, may not be good for the stock, short term. The stock is a high-flier. Tough to argue value when it's Market Capitalization is +$100B, and the dynamic of the business was just revealed.

FB broke from its recent sma trend, and shares are due to be for sale.

May lead to a consolidation here. Not sure by how much just yet. An argument can be made around 45. (Looking to re-enter on oversold conditions.)

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