Yeah, the fundamentals have changed. One of the biggest worries was mobile which has changed. Looking to get long on this puppy for a swing play.
it seems Facebook has the profile of one of those new stocks like LinkedIn, Yelp, Qihu, .... Since coming public last year, institutional investors have been patiently waiting for Facebook Inc.'s (FB) inflection point moment to arrive before beginning aggressive accumulation in the company's shares. That moment finally arrived last week after Facebook posted a dramatic acceleration in the area that matters the most for investors: its mobile advertising initiatives. The most notable highlights included: Revenue growth accelerated dramatically on both a sequential and year-over-year basis. Q2 Mobile advertising revenues posted a dramatic acceleration in sequential growth over Q1. Underlying profitability also accelerated, with the company posting non-GAAP operating margins of 44%, along with much improved cash-flows. 42,885 people received this article by email alert Add your email to get alerts on FB too: Get email alerts on FB »This article was sent to 321,579 people who get the Investing Ideas newsletter. Get the Investing Ideas newsletter » Facebook's dramatic inflection point now makes it a must-own stock for many levels of investors. Prop traders will provide a near-term boost, as they add to positions in next week's expected month-end mark-up by mutual fund and pension owners. With re-allocations of large long-term holders winding down next week, new aggressive growth-oriented institutional investors will have to raise their bids aggressively to get the positions they desire. We see $36-$37 by the end of August, $40-$45 by year-end, and then $50 by next spring. Revenue Growth Accelerates Two Quarters in a Row Here is how Facebook's financials looked through the end of 2012: (click to enlarge) Top-line growth began to accelerate in the back half of the year, with mobile advertising revenues improving strongly from Q3 to Q4. Mobile Advertising Revenue Acceleration Poised to Continue Facebook's momentum in mobile accelerated even further during the first two quarters of 2013. In particular, note the dramatic acceleration between Q1 and Q2: Mobile's percentage of total ad revenues/total mobile spend Q3, '12: 14%, $150 million Q4, '12: 23%, $305 million Q1, '13: 30%/$375 million Q2, '14: 41%/$656 million Think about that. In four quarters, Facebook's mobile advertising revenues have mushroomed from nothing to an annualized run-rate of $2.5 billion exiting Q2. Q3 will be the first quarter of year-over-year comparisons. We expect mobile ad revenues to grow 200-400% year-over year for the next three quarters. Facebook will exit 2013 with its mobile ad revenues at a $4 billion annualized run-rate, logging 300% year-over-year growth in Q4. These accelerating growth rates support an expanding P/E and a much higher price to sales multiple. They also support two other conclusions. One, Facebook has figured out how to monetize mobile. Two, Mark Zuckerberg was right - mobile is the company's biggest engine for growth. Mark Zuckerberg was Right: Mobile Is the Engine for Growth Since last fall, Facebook has made a very strong case that it has figured out how to monetize mobile. We have highlighted selected excerpts from the company's last four earnings calls that detail the company's progress which led to its inflection point moment last week. Mark Zuckerberg made the following comments during the company's Q3, 2012 earnings call: "Let's start with mobile. I think our opportunity on mobile is the most misunderstood aspect of Facebook today. Most people underestimate how fundamentally good the trend towards mobile can be for Facebook. This is because there are three trends that are kind of compounding together. First, mobile will give us the opportunity to reach way more people than desktop. Second, people on mobile use Facebook more often. And, third, long term, I think we're going to monetize better per amount of time spent on mobile than desktop. All of these combined together make mobile a much larger opportunity for us than I think most people realize." From the Q4 call, a more upbeat Zuckerberg provided investors with a more bullish assessment of the company's mobile strategy and progress: "Let's start with mobile. I think more people are starting to understand that mobile is a great opportunity for us. Mobile is the perfect device for Facebook. Mobile enables many new experiences, and its growing overall sharing across all apps. This creates a very dynamic ecosystem, and one where there's a lot of room for us to create even more sharing through Facebook. In December, we released a completely rewritten version of Facebook for Android. By improving speed and stability, we've made a much better user experience enabling people to share even more." From Sheryl Sandberg during the Q1 call: "Marketers are realizing more and more that Facebook is one of the best places to reach their customers on mobile because of our unique ability to reach specific target audiences at scale." Last Week's Q2 Call: http://www.elitetrader.com/vb/reply.php?action=newreply&threadid=276406&
"with the company posting non-GAAP operating margins of 44%" What does "Non-GAAP" mean? Generally accepted accounting principles as opposed to pulled out the ass operating margins????
They probably didn't back out certain items like currency translation or something like that. Usually non-GAAP is to let you know they were making money in "unusual places", like the afore mentioned.