This Day On The Street
Continue to site
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

Why Facebook Shareholders Missed Out on Apple's Party

NEW YORK (TheStreet) -- Facebook (FB - Get Report) 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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FB $92.40 0.00%
AAPL $109.49 -1.20%
GOOG $638.31 -0.63%
YHOO $32.35 1.50%
TSLA $226.00 -2.60%


Chart of I:DJI
DOW 17,050.75 +138.46 0.82%
S&P 500 1,995.83 +15.91 0.80%
NASDAQ 4,810.7880 +19.6360 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs