We all know that timing the market doesn’t really work. Freaking out over big changes isn’t worth your time. However, keeping an eye out for big changes that can make a difference — support or defy your research and anticipations for a company — is not a bad idea. This is why I’m writing about Facebook (FB)'s activity today.
We all know who Facebook is. The social networking giant. Facebook is one of the world’s largest Internet companies, based on users and market capitalization. The website hit over 1 trillion users in January of 2013.
The company’s share price took a jump today, closing at a 14% gain, after posting yet another positive surprise in their earnings. Facebook’s revenue raised 63% to $2.59 billion, which was greatly ahead of the “analyst” expectations of $2.33 billion. The website can attribute much of this to mobile growth, which was particularly high for the year, while daily mobile active users increased at 49%, and 39% for the monthly mobile users.
- Warning! GuruFocus has detected 2 Warning Signs with FB. Click here to check it out.
- FB 15-Year Financial Data
- The intrinsic value of FB
- Peter Lynch Chart of FB
Facebook’s growth appears as if it is unstoppable. CEO Mark Zuckerberg briefly stated, “It was a great end to the year for Facebook. We’re looking forward to our next decade and to helping connect the rest of the world.” Only founded in 2004, Facebook has a limited history as a profitable and public company. Regardless, the company had notable margins, with 2011 margins in excess of 45% and net margins over 25%. These were affected in 2012, as Facebook made several large investments and fought a higher corporate tax rate. More that 80% of the company’s revenue has been derived from advertising offerings in the past.
After a terrible IPO in 2012, Facebook has now seen shares more than triple from their lowest that summer. The social media giant has since mastered the mobile ad area and experienced a large jump in revenue growth.
Many seem excited about the possibility of Instagram and video ads, which is largely untouched potential. What do you think is in store for the social media giant and their future?
Disclosure: No current position held at the time of writing.
Disclaimer: The opinions and ideas in this article are for informational and educational purposes only. They are not a recommendation to buy or sell any stock at any given time. As always, it is imperative for each individual investor to do their own due diligence and perform their own research on any and all stocks before making an investment decision.