Two new reports were released on Facebook Inc (NASDAQ:FB) yesterday. Both reports concentrated on the company’s first quarter results for 2013, and both were suitably impressed with the company’s returns in the first quarter of the year, and optimistic about the year ahead. Facebook Inc (NASDAQ:FB) according to JPMorgan Chas & co. (NYSE:JPM) and Bank of America Corp (NYSE:BAC) analysis, should be worth $35 in the next year.
Facebook Inc (NASDAQ:FB) Earnings Analysis
There were several important take-aways from the Facebook Inc (NASDAQ:FB) earnings report. The first, and most important to analysts waiting for the firm’s multiple to come down, is the in-line EPS and slightly above revenue numbers that the company managed in the first quarter. Those showed that the company is increasing monetization at a steady rate.
Mott Capital Management 4Q20 Commentary
Mott Capital Management commentary for the fourth quarter ended December 31, 2020. Q4 2020 hedge fund letters, conferences and more We survived and flourished in 2020. That is the good news. For the year, the Mott Capital Management Thematic Growth Composite climbed by 25.4% net of fees and transaction costs, easily beating the S&P 500 Read More
The second important metric that came out of the report was news about user metrics. There had been some inaccurate news circling, most notably from the Guardian, about falling Facebook Inc (NASDAQ:FB) user numbers in North America. The company managed to prove that thesis wrong, showing increases in metrics in some of the most important areas of its business.
The ratio of Daily Active Users and Monthly Active Users in the first quarter was 60 percent. This number is a key metric for measuring engagement as it show the amount of users who are generally active, Monthly Active Users, against those that are very active, Daily Active Users. It is the DAUs that Facebook wants to increase as they are worth much more number. The ratio was higher in the first quarter of 2013 than it has been in three years.
Both the JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corp (NYSE:BAC) analysts raise their estimates for Facebook Inc (NASDAQ:FB) for the year ahead because the company’s payments revenues appear to be coming in higher than anyone previously expected. Facebook Inc (NASDAQ:FB) seems to be on a roll in terms of analyst numbers, but that has not really been reflected in the firm’s share price.
Facebook Inc (NASDAQ:FB) shares are up around 7 percent since the first trading day of 2013. The company’s stock has lagged the major indices, and investors seem genuinely worried about the firm. The dangers inherent in valuation in the Web industry, on which the Facebook Inc (NASDAQ:FB) instructed many, seem to restrain the company’s stock more than its competitors.
Despite the $35 price target and solid growth, Facebook Inc (NASDAQ:FB) may not see its shares perform strongly for some time.