Category Archives: Personal Finance

Social Media, Marketing, Business - Connecting The Dots

Facebook Advertising Revenue | What Analysts Are (Really) Missing

Rosenblatt Securities’ Brian Blair and Bloomberg’s Cory Johnson break down Facebook’s first-quarter earnings report on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

In my opinion: This Bloomberg video celebrates Facebook as a big winner after their Q1 earnings report. The title of the video is “what analysts are missing”. What analysts are really missing is the fact that Facebook advertising revenue will suffer in the long run Continue reading

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Facebook Q4 Earnings: Not Everything That Shines Is Gold – What To Consider When Evaluating

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Facebook reported Q4 earnings and the numbers were great! Consequently, the stock price surged. Everyone invested in the company is smiling and some of those that are not, are not so happy. Don’t be sad, if you are not invested, not everything that shines is Gold! Here is why:

The first thing you need to understand before you celebrate the results is, these are numbers created by selling advertising in the different forms the company offers it. That still doesn’t confirm that the product actually works and these numbers will be the same at the end of the next quarter. They might, nor they might not.

Keep in mind, it was Holiday season and everyone spent the biggest chunk of their annual advertising budget. Also, if you need an indication on how Facebook advertising might work, have a look at the Q4 results of those that actually do the advertising. There are quite some “long faces” to look at. I am not blaming Facebook for the weak Christmas season of the retailers, there are quite some other factors to consider, but I keep having my thoughts on Facebook’s business model and the value of advertising on the platform. I am also sure, that advertisers will have their second thoughts on the success rate of their advertising on Facebook and at one point spend money otherwise.

While I am saying this, I also want to remind you that it doesn’t matter how many users Facebook has, all that matters is how many of these users actually click on advertising and follow through with sales. Based on your behavior when you are on Facebook doing your thing, you can get an idea of how good the product is.

Also important to consider, if you base your decisions about buying the stock on “trusted sources” like Wall Street Analysts, keep in mind that they only crunch numbers from the past, there is barely a common sense statement regarding the future. Also, they might follow own interests, or not. You decide.

Hand in hand with reporting the numbers, Facebook’s Mark Zuckerberg stated “Facebook’s future might not entirely rest on Facebook itself”. I am not saying this is an acknowledgement of weakness, but I would strongly agree with him. Facebook has acquired and keeps acquiring other businesses and some of them could to have a bright future, which, in my opinion, Facebook itself doesn’t have.

So, if you are bullish on Facebook, consider these things. You might be happy you have.

Disclaimer: The statements made are my own opinion based on what is reported in the various news sources and my understanding of the markets and the industries. If you look for financial advice, check back with your bank or other sources. Read the disclaimer as well.

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Investing: Small Investors Should Not Be Invested In Facebook And Twitter

Some of you might be huge social media fans and with that believe Facebook and Twitter are awesome companies to invest in. While I agree with the awesomeness in social media, I don’t agree that the hype around the two stocks is justified. And here is why:

Facebook and Twitter have advertising depending business models. In other words, they make their money from big businesses, or small, to advertise on their platform. Nothing against advertising, that’s good stuff and needed in the business world. However, that alone doesn’t justify the numbers thrown around for Facebook and Twitter. Advertising, and the best ways to do it, has still to be figured out after social media became such a powerful publishing tool. One thing, however, is questionable: Does advertising on Facebook and Twitter work? Can it work?
I tried to test it and asked around, real people, face-to-face: Have you ever clicked on advertising on Facebook or Twitter? 1 in 10 admitted to have clicked on an ad or sponsored post, but nobody followed through to buy. While my little personal survey is for sure not groundbreaking findings or news, or a trusted source for anyone, I have the feeling that real honest numbers are even way below the 10% click rate I have discovered. And to be straight forward, I would be stunned to learn the rates are 10% or better. Let’s not even talk about buying. By the way, I have never clicked on an ad on Facebook or Twitter. I can’t even remember the name of the last advertiser I saw. Can you?
For my taste, this means that advertising revenue as it is projected (not delivered) into the stock price of Facebook and Twitter will never occur. No chance! Once that becomes clear, the stocks will get hit very bad.
For Facebook there is another important fact to consider: Google+! For the moment, Facebook might still be the most powerful and most used social media platform, but I believe this is going to change. There are already signs of some groups breaking away, for all kind of reasons. Working in the “social media industry” I know that there is talk that Google+ is the more powerful platform. Not only does that talk become louder and louder, those that do social media for a living know that Google+, and even others such as Pinterest, are gaining ground. Once some of the impressive Facebook numbers of the past start breaking away, the stock will be standing in the rain, heavy rain.
As far as Twitter goes, there are small businesses that have more revenue than Twitter and the entire hype around them can only be traced back to Wall Street. There is plenty of activity going on that really doesn’t do any good for anyone North of Houston and across the East River or Hudson. Institutional investors, including hedge funds, are playing the stock and while doing so lure the small investors into the game. Be warned, don’t get played on this one! As I write this, the stock has lost over 7%. Reality is calling.
My recommendation for the small investor, stay away. Let the big guns pick each others pockets.

Disclaimer: I am not a licensed professional and I only express my personal opinion about these stocks. Please click the disclaimer link for more about this. 

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Don’t Jump To Play Twitter’s Plunge

Ken Sena, Analyst at Evercore Partners, discusses the performance of Twitter’s stock, the company’s impact on content providers, and if tech IPOs are manipulated. He speaks on Bloomberg Television’s “Bloomberg Surveillance.” (Source: Bloomberg)

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Investing: Who Are Mutual Fund Investors – Infographic

Mutual Funds have been important vehicles for investors to create retirement funds and wealth. After the financial crisis had hit investors, there have been reports of capital “flow outs” of Mutual Funds. This infographic shows who is investing in Mutual Funds. There are some interesting facts and trends. Have a look.

Infographic Source: KurtoSys

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The History Of Bitcoin And How It Came Together – Infographic

Bitcoin has become a valid currency, at least for some. Others look at the currency from the skeptical side and refer to risks this currency could bear for “regular” currencies and economies. For the most part, people sit in between knowing not much about the virtual currency. Over the past five years, it has gone from being an experiment to a market capitalization of billions of dollars.

This infographic shows the history of Bitcoin, from the beginning in the midst of the financial crisis to the first ATM, acceptance by Virgin Galactic to accept Bitcoins for space travel and The People’s Bank of China not allowing Chinese banks to handle Bitcoins.

Infographic Source: VisualCapitalist

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