Are Facebook's `Dog Days' Over?

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Sept. 12 (Bloomberg) -- Raymond James's Aaron Kessler, Tradingblock's Tim Biggam and Bloomberg's Julie Hyman look at Facebook's performance since the company's IPO. They speak with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Is the social network finally a safe investment?

We want to ask our panel.

This one has come a long way.

It has great the turning point if you look at the stock is here seemed to happen in july when facebook came out with earnings.

That's when the perception about facebook seemed to change.

The stock was up 30% when it came out with earnings, revenue was up 53%, profit was up 65%. but the number that was most important was 819 million -- that's number of people using facebook via their mobile devices.

That was the tipping point, if you will, in terms of the perception for facebook and getting them to use it mobile and getting advertisers to tune in as well.

Mobile revenue made up about 41% of the total and after it took that leg up, it has been rising since then.

A 30% rise in one day is going to give you a good start when you are trying to attain that ipo price area that was always the big complaint when the company went public, that they were not doing enough with the mobile space.

They showed everyone.

Do you feel they are continuing to do enough to build a mobile platform?

Mobile amounts to about 41% of revenue and we think that goes to 50% over the next couple of quarters.

When facebook team outcome of the original advertising was the right handrail advertising and was in a good format for a lot of advertisers.

The newsfeed advertising and bigger ads and mobile which has a higher click through rate is driving results.

If they're driving results for advertisers, you will see the results.

Especially recently with direct response advertisers and app companies like gaming companies.

They are really starting to use the facebook platform not just for branding but commerce as well.

And they've gotten into video.

I think we are still waiting for a bigger video push.

That may come this year or next year as well as instagram monetization.

Is it seen as a big source of revenue for them?

I remember seeing some of the numbers and what they were anticipating getting.

It was ready significant.

Right now on its cost per thousand impressions, you are looking at about four dollars or five dollars on the newsfeed.

Video ads could be in the $20 range.

A significant premium but they have to be careful about not hurting the user experience.

That's true.

You need those users and they've got them at least for now.

We are seeing a ton of exuberance on the options side and implied volatility actually going up with the stock making all-time highs which is the opposite effect.

We also see the reverse skew where the calls are playing with higher volatility than the puts.

The last time we saw this action was apple around $700. i'm a little bearish even the move we have had.

Bringing about -- look for the stocks to stall out around here, especially given the move and has had.

What is your price target?

Right now it is $38, so it's above our price target.

Because you look at the 2015 estimate, it results in an upward bias to estimates and valuations.

You said your price target is $38? currently.

You are changing it?

We haven't changed it yet but we will let you know once we do.

One thing we haven't talked about is with the rapid growth, the valuation -- i don't know if when you talk about a valuation 63 times this year's earnings, is it meaningless when it gets to that level?

But within the world of technology and companies of this size, you are talking about a stock that is relatively rich compared with some of the other tech giants.

I'm sure you heard a lot of commentary on the floor when this thing first went out.

There was so much chris is him -- so much criticism.

Everybody hated it below the ipo price and everyone loves it at all time highs which is typical from a traders perspective.

We are starting to be a little cautious around $45 $45, so we are always contrarian.

This text has been automatically generated. It may not be 100% accurate.


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