NEW YORK (
(FB - Get Report)
reported earnings last night. They beat the quarter and mobile revenue, which a lot of analysts look at, surged. Jim, the stock is down about 5% today. What's going on?
OK. Well, first, some people were disappointed in the earnings, which are so-called down. I mean, I think, like
(AMZN - Get Report)
, they could show much better earnings but they're spending a fortune. [CEO Mark] Zuckerberg said it all when he started out by saying, "Listen, we're not about the near term." So, immediately you take out all the people who thought it was about 2013. So those are the people who are the sellers. Now you're going to begin to pick up people who are long-term holders, who like growth stocks, who are willing to bet that 2015 will be a big year. I'm not kidding, that's how they think. They're trying to find the next Amazon. They recognize that Amazon spent like mad in order to own the space. And they think Facebook's going to spend like mad.
You know what, a lot of analysts downgraded it today, saying there's going to be margin pressure because they're going to spend. But if you're a growth company, don't you have to spend?
Well, this is the dichotomy. I always like to look at it in terms of holders. There are a lot of holders who are expecting, at any given time, a pop, a better-than-expected earnings [report]. They didn't do better than expected today. Then there's other people who say, "Wow. I see that mobile is working for them. Mobile's the way of the world, they have a billion customers, they are doing some sort of form factor that the advertisers like, so I'll stick with them through thick and thin." You have to understand that those people in the latter camp have a lot of money. They are buying the stock.
Remember, the stock went from $18 to $32 in a straight line. All it is, is back to where it was last week. I don't want to take my cue too much from the stock, but the downgrades were fatuous in the sense that they were people who clearly were upset that the company was going to spend a lot. I don't know anyone who really thought that they wouldn't spend a lot.
My bottom line on this, Lindsey, is if you're a guy who's patient and you believe that stocks have an ability to be valued in 2015, I understand why you would own it. It's not a stock I'm recommending.
OK. Not recommending Facebook here.