Facebook crushed earnings last week and the stock is riding high, spiking up nearly 16 percent on Thursday alone. That represents one of the single largest one-day gains in market cap in the history of financial markets. Yep, the Facebook earnings beat was historic.
Inside The Numbers
Facebook earnings beat or met every consensus estimate set by Wall Street from revenue and EPS, to monthly and daily active users. We’ll leave the actual results out — they are available anywhere. This is intended to be a news article; this is a research piece. And there’s more to this story than just a simple Facebook earnings beat.
China
As of yet, Facebook has no users in China even though it has 1.59 billion monthly average users and growing. But, the company is making inroads to enter the country. Further, in the CML Pro research dossier, we discuss how Facebook can reach yet another 3 billion people by delivering the Internet through solar powered drones.
Revenue per User
In Facebook earning beat, Average Revenue per User (ARPU) rose a staggering 26% to $3.73 (re/code). This is a critical measure, because, at some point, user growth will slow, so the growth story turns to increased monetization of the user base.
VIDEO
Online video advertising is the new battlefield. Spending in the U.S. will hit $9.1 billion in 2016, up from $4.4 billion just two years ago.
Facebook and Google are at war, openly. Google has 175 million unique video viewers across all Google Sites in just the U.S. alone. Facebook has 90 million. Here’s a chart from Statista:
Mark Zuckerberg disclosed that 100 million hours of video are watched daily on Facebook. That compares to Google’s YouTube number that is between 500 million and 650 million. So, unbelievably, there is a lot of room for yet more growth.
In our research dossier “Facebook Is Going for The Kill Shot on Twitter Right Now,” we discuss in detail the two new tracks Facebook is following for real-time communiques. First, Facebook introduced Live Video and Collages in December of 2015:
Today we’re beginning to test the ability for people to share live video on Facebook. While watching a live video, you can tap the Subscribe button to get notified the next time the broadcaster goes live. – Source: Facebook
Then, on January 21st, bigger news was released:
Today we’re launching the Facebook Sports Stadium, a dedicated place to experience sports in real-time with your friends and the world. – Source: Facebook
The company is openly considering giving video its own location on the Facebook platform for people who just want to watch videos and Mark Zuckerberg was pretty clearly pushing the new initiatives. The company revealed that 500 million people are watching video on the platform each day.
WHATS APP
The messaging service crossed one billion MAUs. Facebook cut the $1 a year fee but Mark Zuckerberg continued to say that the business is monetizable and that companies are now advertising on it.
In the full Facebook CML Pro research dossier, “Our Trip to India and Facebook’s Impossible Dream”, we discuss how WhatsApp may end up being larger than Facebook proper itself. This a totally different type of social media and has the power to connect the world and to potentially double Facebook’s reach.
Facebook Messenger and Pay
Facebook Messenger crossed 800 million MAUs. That portion of the business is focusing on mobile pay.
The company did reveal that revenue fro Payments in Messenger actually dropped 21% year-over-year but Facebook has loaded management with former PayPal executives (Source: TechCrunch.)
Further, Zuckerberg said:
“We’re looking at the stuff Apple is doing with Apple Pay, which is interesting and takes a lot of the friction out of payments. It’s good for everyone.”
The idea is that mobile pay will push the amount businesses are willing to spend on Messenger. We have an entire CML Pro dossier dedicated to mobile pay: You can read it on CML Pro. Here’s a taste:
Here’s the chart of global mobile payment transaction volume from Statista, forecasting out to 2017. This is in billions of dollars.
Bank of America expects this market to hit $3 trillion by 2022.
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