Facebook revenue increases by 60%, Advertisers unhappy

Written by Nina Thomas

 Facebook has revolutionized the way the average person goes through a normal day.   Posting, commenting, liking and uploading has become commonplace.  But after going public at $38 per share and then dropping to $18, this stock proved to be less successful that anticipated, especially because of such high hopes places on Facebook.  This initial IPO dropped so low that it set a low standard for Facebook as a publicly traded company.  Since this time, Facebook’s revenue has increased by 60%, beating investor expectations.  It is now valued at $48.71.  However, the question now is whether advertisers are satisfied with the way Facebook is positioning their ads to generate such a drastic increase in profit.

This radical increase in revenue for Facebook came after broadening access to its mobile audience instead of focusing primarily on desktops.  Nearly 89% of revenue coming in from Facebook comes from advertisements as of now rising from 88% not too long ago.  Revenue rose from $1,262 in September 2012 to $5,286 in September 2013 (in millions).

Despite this major increase in revenue, hope for Facebook was low at first.  CEO Marke Zuckerberg had waited to make Facebook a public company, “We’re going public for our employees and our investors. We made a commitment to them when we gave them equity that we’d work hard to make it worth a lot and make it liquid, and this IPO is fulfilling our commitment. As we become a public company, we’re making a similar commitment to our new investors and we will work just as hard to fulfill it.”  After announcing its IPO, Facebook was under a lot of skepticism about being able to generate profits from advertising or other forms.  As mentioned earlier, Facebook dropped to $18 and later flattened to $20.  This why an increase to $48.71 is shocking to investors.

This large increase is largely attributed to Facebook changing it advertising strategy.  However, many advertisers are still unsatisfied with Facebook ads compared to other large companies such as: Google, LinkedIn and Twitter.  The reason for this being that many advertisers are unhappy with how their advertisements appear on Facebook pages as well as the number of advertisements.

Much of Facebook’s revenue jumped from 14% coming from mobile sales, to 41% this past year.  This is one reason why Facebook’s stock has performing so much better recently.  This increase in mobile sales also means that many advertisements from advertisers are also shifting from desktop ads to mobile ones.  This shows a shift in Facebook from earning money from desktop computers to mobile phones instead.

With this new quarter of revenue for Facebook, the company is excited about what is still to come.  “The strong results we achieved this quarter show that we’re prepared for the next phase of our company, as we work to bring the next five billion people online and into the knowledge economy.” Said CEO Mark Zuckerberg in a statement concerning third quarter 2013 results.

This same stock that was hovering in July just over $25 now rose to $50.23 by October.  “Congrats to the people who had to guts to hang on.” Said Jon Weiner concerning the extreme rise in Facebook’s stock.  Many investors now regret not holding on to Facebook’s stock back when it had dropped.

Now that Facebook’s stock is in a good place, they continue to make changes and implement new things.  Facebook has recently showed how advertisements will be looking like on Instagram, spreading its influence even farther.  The question now is whether advertisers will be satisfied with the advertisements available on Facebook and Instagram.

Books Will Always Be Needed

Barnes and Nobles (also known as BN) is traded on the New York Stock Exchange under BKS, and it is an investment that you should take. Last year Barnes and Nobles made a bold move, moving it’s nook out of its walls and into Walmart stores. But a bigger statement was made when barnes and nobles nook replaced amazons kindle. A surprise? It shouldn’t be considering that the nook is proven to have better features like it’s longer battery life and reader friendlier screen, as well as a continuous list of quality. Of course Barnes and Nobles is still taking hits from Google and Apple, who are hands down in the top 2 spots (for now atleast), but Barnes and Nobles will not take the path of the Borders company and other book stores that gave up and eventually retreated to defeat. The fact that Barnes and Nobles is still here, is a major statement itself, just remember people will always need books, and students will always need what to study from.

Reports from Barnes and Noble’s q10 show cash flow from operations to have gone down, but a 16% increase in earnings before interest, taxes and other fees. When the operations statement goes down, this is usually an indication of something that took a hit. However last year was a boom from their launch of the nook. With the launch of competitors new products that came out and affected the sales of Barnes and Noble’s nook, such as the iPad 3, Windows 8, and the iPhone 5, it is clear that the innovation and taste for the nook is still here, but with the economy the way it is people are still limited to the #1 and #2 tech product spots.

As for BN’s stock, we need to understand that Barnes and Nobles is a physical attribute, why? Look at the Amazon company that does not have revenue and has run on deficits at times, it is all about the hype and like they say, stocks trade ahead of themselves. In the past year the stock has traded at 12.59 – 23.71 which is more than modest and conservative. Also noteworthy is the high 70 million copies sold of “fifty shades of grey”, and other records that the store is producing.

Let’s look at some advantages that Barnes and Nobles has currently. It’s return has been pretty good so far this year, as compared to other companies, and it also has a debt to equity ratio better than Amazon (a top competitor). The time to invest is now, as it gets colder and the season is here the demand for getting cozy with a book in the magnificent Barnes and Nobles local stores is how it begins.

But getting back to its core, the nook, it does have a following. And the following is growing and this is key to establishing the book stores brand, which it has been doing.

And we need to realize one of the biggest assets to the company, as expressed in the real estate world: location, location, location. Barnes and Nobles has one of the prime hot spots of most areas that attracts and will always bring in its clientele. Companies online come and go and do not supply the physical coziness. This is a big beneficiary of Barnes and Nobles college bookstore partnerships, the division of Barnes and Nobles that works with college campuses to get books to students, a business that brings in billions of their revenues. Barnes and Nobles expressed in their annual report great aspects for the cornerstone of their industry, including a 1.1% increase in sales and opening of new locations to further their success.

There it is ladies and gentlemen, the overview of why barnes and nobles is a go to place for investments and a place where your future wants to be.

Moskowitz, Dan. “Buying Barnes & Noble’s Stock Here Be a Good Read?.” (2012): n. page. Print. <http://wallstcheatsheet.com/stocks/would-buying-barnes-nobles-stock-here-be-a-good-read.html/>.

“BN Form 10-Q Quarterly Report.” (2013): n. page. Print. <http://forinvestors.barnesandnobleinc.com/secfiling.cfm?filingID=1193125-13-358093>
Barnes Nobles, . “Barnes & Noble 2013 ANNUAL REPORT.” (2013): n. page. Web. 13 Nov. 2013. <http://www.barnesandnobleinc.com/for_investors/annual_reports/2013_bn_annual_report.pdf>.

A significant economic indicator that I’ve selected is Corporate profits. Corporate profits are “a component of the government measure of national income; the net revenues received by incorporated businesses before corporate income taxes are subtracted.”

Corporate penalties obtained by the SEC have increased over the years. This shows that some corporations are discouraging job growth. This has results in a decline in the stock market performance which deters investors.

Eliot Spitzer, Attorney General of New York has targeted some of these corruptions in Corporations. He has been said to have potential as an employee for the White House an could bring about positive change to the Nations Economy.

A specific corporation that reflects the economy is General Motors. Gm is selling more cars to China than it is to the U.S. Suv’s and CUV’s are doing very well with their sells to China. This offers jobs to Americans to process and make more vehicles. A Subcategory of Corporate Profits  is the Corporations inventions. If Gm had created a sufficient battery for motor vehicles, it would be a “turn of the century invention”. There would be a boost in consumer spending and investment. This would encourage job growth to make the batteries and vehicles. The invention has not happened yet, but if it did there would be a boost in the Economy like that of the computer. The reason for this is because such an invention would make a Corporation prosperous. It would out-due its competitors and other companies would be bought out.

In 1960, GM manufactured nearly 60% of the cars sold in America. Presently corporations have to “pay high healthcare and manufacturing cost, expensive union contracts,excessive capacity, poor quality and lackluster design. “Public image has gone bad for some companies”, and that is a sign of a poor corporation which hints a poor economy. “Analyst have speculated bankruptcy within some corporations”

Public endorsements are also beneficial. Investors Warren Buffett and David Einhorn “purchased 10 million shares of Gm”. They are currently ahead of the European Company Ford. When you compare the two Corporations you see why the U.S economy is doing better than the European.”There are profits in North America”. “Next GM will be introducing its next generation Chevrolet Silverado and GMC Sierra Pick ups. This shows good competition for select Nations who constantly upgrade their technology; which means they are ahead of others.

When executives in Corporations retire they have negative impact on Corporation privfits like Mark Fields, retiree of Ford. This has resulted in a massive decline in Fords profit.

Sources

http://www.forbes.com/sites/joannmuller/2012/10/10/why-ford-is-lagging-gm-on-wall-street/

http://www.moneycrashers.com/leading-lagging-economic-indicators/

http://www.theatlantic.com/magazine/archive/2008/07/electro-shock-therapy/306871/

http://www.cnbc.com/id/100870316

http://www.forbes.com/sites/michaelbobelian/2012/01/23/despite-many-missteps-the-sec-has-made-progress-on-one-front-extracting-larger-payouts-at-least-compared-to-a-decade-ago/

http://www.forbes.com/sites/michaelbobelian/2012/04/11/the-secs-latest-revolution/

          What Do Our Retail Sales Say about the Economy?

Retail Sales are heavily monitored by economists and investors . The retail sales indicator follows the dollar value of merchandise sold within the retail trade making a sampling of companies involved in businesses of selling products. The retail sales report can cause a higher than average volatility. This indicator is a valid predictor to inflationary pressure which causes decreased cash flows in companies.

The Fed can curb possible inflation if, for instance, a dramatic increase in retail sales happens mid business cycle which can lead to a short term hike. Retail sales get publicity and are easy to understand in ways relatable to the average consumer. Valitile components of retail sales show underlying demand patterns .

According to a recent article, “Retail Sales, Consumer Confidence and Producer Prices Decline,” clothing sales have dropped by 0.5 % in September and department store sales were down 0.9%. Also in September, electronic sales and food and beverage sales increased 0.9%. General Merchandise had a 0.4% increase and Net retail sales rose in 9 of 13 major categories.

Partial blame to weak spending goes to the Government shutdown but Lindsay Piegza, chief economist at the investment firm Sterne Agee said that regardless of Washington debacle, the weak trend was already established due to a tepid job creation and minimal income growth.

The conference board has shown the consumer confidence index is down to 71.2 compared to 80.2 in September. The debt crisis and government shutdown has taken a serious toll to consumers’ expectations. Nonetheless similar declines in confidence, fiscal cliff discussions and the government  shutdown in 95′-96′,  confidence will remain volatile for the next several months. An article published back on September 13th says that the economy is on a slow pace by their review of retail sales. Augusts 0.2% retail sale increase was seen from automobile purchasing and goods such as furniture and electronics. All decreasing sales were the receipts for clothing, building materials and sporting goods.

Clothing store receipts decrease is the lowest in 1 1/2 years.  Food and energy costs were unchanged in August. Falling oil prices stemming from falling exports out of Libya and selling the commodity for profits show soft US economic data. Reuters said “crude prices shot up on Tuesday, exports from Libya dropped to approximately 250,000 barrels per day, down from an overall capacity of 1.25 million barrels per day, due to labor protests disrupting operations at major oilfields and ports.

Looking at the economic indicator of retail sales, June saw Americans buying cars and trucks at a pace not seen since 2007 which is a sign of consumers knowing how to spend as household wealth and the labor market improve. Summer declarations of economic improvement were optimistic in consumer spending. In regards to automobiles, the need to replace aging vehicles, attractive financing offers and steady employment will keep the car industry profitable. Economists in the summer were saying that economic indicators will continue to improve and consumer spending growth pace is slowly picking up. Factory growth, consumer price index and Costco Wholesale all saw gain this past June. This summer seemed to be a promising trend in our Economy, but after August things seemed to fall short, slow and stagnant.

http://www.bloomberg.com/news/2013-07-15/retail-sales-in-u-s-increased-less-than-forecast-in-june.html

http://www.reuters.com/article/2013/09/13/us-retail-sales-idUSBRE98C0IA20130913

http://www.reuters.com/article/2013/08/13/us-usa-economy-idUSBRE9770K220130813