This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Why Facebook Shareholders Missed Out on Apple's Party

Stocks in this article: FB AAPL TWTR

NEW YORK (TheStreet) -- Facebook (FB) blew through consensus revenue and earnings estimates for the first quarter and the market just shrugged. Apple (AAPL) also had a stellar quarter and the market rejoiced.

The two's stock prices took very different paths. Facebook, at around $62, is down 1.2% in the last month but up 7.2% for the year to date, while Apple, at $589, is up 8.6% for the month and nearly 5% for the year to date. Yet, in the March ended quarter, Facebook beat consensus earnings estimates by over 40%, Apple only beat by 14%.

Has the market made a mistake?

Facebook continues to hit on all cylinders when it comes to engagement and monetization. While Twitter's (TWTR) recent quarter raised concerns of slowing engagement, Facebook actually grew engagement. During the first quarter, Facebook's engagement (measured at daily active users divided by monthly active users) was up to 62.9%, compared to 61.7% for the December-ended quarter.

Now that Facebook has gotten the ball rolling on ads, monetization is really starting pick up. Ad revenue were up 83% year over year last quarter and the focus going forward will be to increase usage and engagement to drive ad revenues even higher.

The first part of that is monetizing video ads.

Earlier this year Facebook started testing auto-play video ads. Video ads could account for over 10% of Facebook's revenue this year. Longer term, the opportunity lies in being able to go after the $200 billion global TV ad market. Over 100 million users are already using Facebook during prime-time TV viewing hours.

Then there's the acquisitions.

Facebook has taken some heat for its recent spending spree. It forked out $19 billion for WhatsApp and then another $2 billion for Oculus. Although many investors scratched their heads at the WhatsApp acquisition, it remains one of the largest opportunities for Facebook.

WhatsApp only has around 450 million users. But that number is expected to skyrocket over the next few years, especially as Facebook is able to leverage its one billion user base to promote the app. The number of WhatsApp users could hit one billion by the end of 2015.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs