Facebook (FB) Wins Again

| February 7, 2014

The market may be under pressure these days, but that hasn’t stopped Facebook (FB) from soaring to new highs.  In fact, at over $64 a share, FB stock is now over 200% higher than its 2012 lows.  Not to mention, it’s well above the IPO price (which drew so much criticism).

So how did Facebook do it?

Part of the reason is certainly the company’s growth – in users, revenues, and profits.  But perhaps more importantly, FB has been able to successfully transition to a “mobile first” company.

That’s a huge deal to investors and analysts.  The average consumer is now doing most of his or her web surfing and digital communication on mobile devices.  Mobile ads are very clearly where companies are focusing their marketing efforts.

As such, it was big news when FB announced a majority of their ad revenues now come from mobile.  To be precise, 53% of ad revenue came from mobile ads, up from 49% in the prior quarter.

Here’s another reason why mobile ad revenues are important…

Facebook’s monthly mobile users jumped to 945 million, up 39% from a year ago.  Daily mobile used spiked 49% to 556 million.  Just imagine how big those numbers are – and how massive that audience is for advertisers.

And, it’s not just mobile numbers where FB is making a splash.

The social media giant’s total users climbed to 1.23 billion worldwide.  757 of those users signed on at least once a day.  That’s a 22% increase from the prior year.

Meanwhile, revenues grew 63% year-over-year to $2.6 billion.  Adjusted earnings climbed to $780 million or $0.31 per share.  That’s 4 cents over what analysts had estimated.

Finally, while FB is well behind Google (GOOG) in its share of worldwide digital ad revenue, that share did grow from 4% in 2012 to 6% in 2013.  I expect the number to continue growing over time with FB closing the gap on GOOG.

Here’s the thing…

FB has been a good earnings play for the past few quarters, consistently beating expectations.  For the next quarter, it may not be a bad idea to load up on some cheap upside calls ahead of earnings.

As long as the trend continues, it’s worth a shot.  And, with FB in rapid growth mode, there’s no reason to expect negative results anytime soon.

Yours in Profit,

Gordon Lewis

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Category: Stocks

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also one of the key analysts behind the highly successful Options Trading Wire and Advanced Options Adviser. As a market maker on the floor of the CBOE, Gordon analyzed and traded stocks and options across a broad range of market caps and industries including retail, internet, oil, insurance, and telecom. He often traded thousands of options contracts per month… and it’s fair to say, Gordon’s analyzed and invested in some of the most complex and successful options strategies in the world.

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