Hate to say I told ya so, but remember when I was the “only idiot buying $FB” (Cody Willard: Why I’m the Idiot Buying Facebook) back when it was below $20 a share? I do. I remember all that displaced hate and anger (Bring on the Facebook hate).
In fact, made a steak dinner bet with the best value investor I know, Robert Marcin, back when Facebook was at $18 a share or so, that $FB would hit $100 before it hit single digits. It was a rather outrageous bet at the time, but I had my money where my mouth was anyway as I made the stock the largest position in the my portfolio and even loaded up on long-dated call options while it was down at those levels.
He brought up our bet today, though he noted it’s still a long way to $100 for Facebook – “$FB knocks cover off with 63% revenue growth! Thats the number investors are paying for. Kudos to cody for his call on the stock! A long way to go til they reach his $100 target in our wager, but its a great qtr for the $FB. I still believe stock is very expensive, with a mkt cap around $160 billion and sales around $11 billion annual run rate.”
Marcin is right about how impressive $FB‘s topline growth was once again. And he’s also right that $FB ain’t cheap any more, like I’d argued it had been at $20.
Yesterday, I’d answered a Marketwatch reader question about what to expect in Facebook’s earnings this way, “Remember that I own FB for the next few years, not for this quarter. Feet to fire, I’d guess the company beats top and bottom line and that usage and revenue per user is up above estimates too. Not sure what will be the catalyst for tomorrow’s FB action though — remember that time it was sold off after a good quarterly report because of teen usage concerns? Anyway, I’m holding my FB steady.”
The single most impressive part of Facebook’s rather impressive quarterly report last night was this nugget, “Overall ad impressions declined 8% Y/Y while price per ad increased 92% Y/Y due to the mix shift from Desktop Right Rail towards News Feed ads on mobile and desktop.” Mobile usage is leading the way for Facebook — and they’re also able to charge even more on mobile, despite Google and other companies having to charge less on mobile than on desktop ads.
As I’ve noted repeatedly in the quarters since I loaded up on Facebook, I’ve sold all my FB call options but with today’s pop, Facebook common stock, is once again my largest position. I’m probably going to look to trim a few Facebook shares here above $60 a share, locking in a triple, and reducing a little bit of my exposure to Facebook here. It’ll still be a top 3 largest position in my portfolio though.
