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Just one look at the chart and you will see why all the ballyhoo about the botched Facebook (NASDAQ:FB) IPO was really “Much Ado About Nothing.” As of this very moment, Facebook’s share price of $76.37 is almost exactly double its IPO share price of $38.23 on 28 May 2012 and more than quadruple it post-IPO share price of $18.06 on 27 August 2012. It’s just another example of the foolishness of knee jerk stock shopping versus the wisdom of investing for the long term. The fools who sold off early took it in the shorts. Those who got in for the long haul have reaped substantial rewards.
Facebook 12-month Chart
The Facebook share price has gained more than 7% today alone after closing at $71.29 yesterday. In a masterpiece of understatement, Founder and CEO, Mark Zuckerberg soft-pedaled comment was that “We had a good second quarter.” If he considers a 61% increase in second quarter year-on-year revenue to be “a good quarter,” I have to wonder what he considers a GREAT quarter. Second quarter revenue was $2.91 billion compared to $1.81 billion in the prior year, which boosted first half revenues from %3.27 billion in 2013 to $5.41 billion this past six month. One reporter was much less reserved than Zuckergber, saying that Facebook’s results “knocked the snot out of Wall Street’s expectations.” I wish I had said that.
With 829 million average daily active users during the month of June, I cannot believe that I actually know people who do not use Zuckerberg’s site. By the way, that is an increase of 19% over 2013. Mobile daily active users, reflecting the transformation of the mobile electronic market, increased by 39% versus Q2 2013.
Usage is fine, but show me the money.
Did I not mention a 61% increase in second quarter revenue? Well, there’s more, and most of it comes from advertising revenue. You remember advertising revenue – the thing that social media naysayers said would never be successful – don’t you?
- Advertising revenue increased 67% during the quarter to $2.68 billion.
- 62% of that revenue is came from mobile advertising. That is 22 percentage points from Q2 2013.
- Revenue from other sources was up 9%.
- Operating margin was 48%, and eat-your-heart-out percentage for most businesses of any kind.
- Net income for the quarter increased by 138% from $333 million to $1.09 billion.
- Diluted EPS increased from $0.13 to $0.30, itself a 131% gain.
Some added perspective
- Facebook’s share price has increased in value by more than 107% in the past 12 month. Compare that to the S&P that everyone has been excited about – a 17.86% increase over the same period. Yes, that’s correct, 107% versus 17.86%.
- Facebook’s market cap is now in excess of $195.5 billion, which now puts it ahead of IBM (NYSE:IBM) as the fourth-largest U.S.-listed tech stock. IBM’s current market cap is $194.2 billion.
- Only Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) and rank ahead of Facebook with market values of $366.8 billion, $402.2 billion and $580.7 billion, respectively.
- Analysts estimate that 20% of all mobile advertising revenues are earned by Facebook.
Barclays described Facebook’s performance as “very impressive…on top of what we believe were very high street expectations.” Mark Zuckerberg would say, “We had a good second quarter.”
