Facebook's remarkable about-face
After a spectacular conference call, it looks like the social network has made a quick turnaround on mobile advertising.
Who in heck would have thought Facebook (FB) could have saved this market? It was a tall order after Tuesday's shellacking, but this company, with the most disgraced major initial public offering I can ever recall, reported a truly tremendous quarter Tuesday night. Then management followed it up with the best conference call of the season.
Here's a company that, by its own admission, hadn't done much at all on mobile up until the beginning of the year. In fact the company -- through CEO Mark Zuckerberg, who did an amazing job -- stated, point-blank, "We hadn't started trying yet" at the start of the year.
But now 14% of the business is mobile advertising, and it could double fairly easily amid the roll-out of Instagram, the acquisition of which just closed.
You know what stood out on this call compared with the previous one? Raison d'etre -- the rationale for believing that these guys are true capitalists who aren't just trying to build a social network but are building a socially based advertising network. This is a company that, after having initially been blindsided by the mobile revolution, is now ahead of it.
In fact, the company caught up so quickly that now you have to question the shorting ahead of the November lockup to hedge any gains -- whether that shorting might be overdone and whether the actual deal could come in above where the stock is today. That may seem tough to achieve, but when you listen to the call, you certainly want in to the stock.
What was so compelling? How about Zuckerberg's saying users and major advertisers like Facebook's mobile application more than desktop because it is easier to reach people and there is more engagement by customers on mobile? Unlike in the last call, Zuckerberg now has a ton of data to verify that bold claim, including the statistic that 40% of users are likely to use Facebook on the desktop, while 70% use it on mobile.
Why wasn't this obvious before? Because it wasn't happening. I got the sense, from the mea culpa on the call, that Facebook's switch to supporting the Apple (AAPL) operating system has hastened the move greatly. I believe it's what has led to a real bonanza that is intriguing everyone from Procter & Gamble (PG) and Wal-Mart (WMT) to Amazon (AMZN) and Capitol One (COF). Maybe the terrific quarter of that last name could be pinned, in part, to the Facebook campaign.
How strong a case was there made for mobile on the call? It would not surprise me to see General Motors (GM) back on Facebook after that slap in the face the week of the IPO -- that is, if Facebook will let it. I could see how Facebook won't have to, as the company is now reaching three times the targeted audience of the Super Bowl every single day. Facebook says 70% of advertisers are reporting a tripling of their return on investment for their ads, another bold claim that I think Facebook can back up pretty easily. After all, the company told a story of tremendous gains for Samsung's phone through Facebook advertising as 85% of people who saw the ads for Samsung were more likely to buy a phone than not.
As good as the Apple mobile app can be, I can't imagine how strong the Android presentation will be, and that's just now being rolled out. It's just going their way.
Finally, we got a nail in the coffin that Zynga (ZNGA) declines can hurt the future. The company made clear that it was a Zynga problem, not a gaming problem, and that gaming revenue is doing just fine, thank you.
It was a remarkable call. The move in Facebook's stock is justified. The only thing that surprised me was that no analysts said congratulations. I guess they were as stunned as I was about how quickly Facebook's fortunes have turned and that the dream became a reality after one good quarter.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and is long AAPL.
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On the rare occasion I log on, I click on the ads that pi$$ me off and am happy to offer negative feedback. I've never seen a "good" ad on FB that made me want to buy anything.
i don't click on FB ads, but have wondered if i should advertize my own product on FB. so they NEARLY had me consider paying to post an ad.
THEN i realized that I AM ALREADY ON FB and don't need to pay to advertize. so i simply drop my own ads into my regular FB page. and it works.
i do find from others i know online that many people are actually clicking the ads. so FB is working
Time to crash the Dollar and arrest the first ones to holler. Time to go get a REAL job, Jim.
Just in time for the insiders to start selling again in mid November. What a manipulated scam this stock is. Looks like it’s time for me to think about getting back into those Put options with a $20 strike. That worked out pretty good for me the last time I bought them when the stock was trading at $26. Don’t think you’re going to front fun me on it this time Mr. Hedge Fund. I already did it.
Still don't know when it will reach it's initial IPO of 45, but I wouldn't be surprised if it's around 35 by the end of 1st quarter next year.... but it's gaining too fast today....look at that - this morning a 20+% gain?
Latest housing stats guarantee an accelerating recovery for small businesses l-- anything that has to do with houses from draperies to architects to title companies
The S&P 500 is up 12.87% year to date.If you listen to those negative right wingers
you`d think the market was down 80%.They say anything to try to make Obama
look bad.That Dobbs on Fox used to be a middle of the road guy.Now that he`s on Fox all he does is run down Obama.I`ve lost all respect for him.
Jim don't do a flip flop like Romney. You said FB was going to $15 because it's a fad which will be replaced over time like myspace, sr friend, your pet, and all the other fads websites. They can be copied.
Which Romney will we see today on tv, the real one or the flip flopper ?????
For War against War, for women against women, for middleclass against middleclass, for coal against coal, for medical reform against medical reform.
A real shape shifter, a chameleon. America wake up to this guy he been an opportunist all his life !
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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