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Ads Are (Finally) Coming to Instagram

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Facebook-owned (click ticker for report: ) picture and video sharing social network Instagram announced Thursday that it will begin displaying ad content. Although several brands are already active on the network, this will be the first time that companies will pay to reach Instagram’s 150 million users. Since Facebook paid $1 billion for the company back in April 2012, we think advertising was an inevitable development. Some users will be upset about Instagram introducing ads (the image below is taken from the announcement page), but users also predicted the demise of Facebook and Twitter advertising. Source: Instagram Yet, the popularity of Facebook and Twitter has remained resilient. As long as Instagram delivers relevant content in a reasonable amount, we doubt … Read more

LinkedIn Acknowledges Its Stock Is Overpriced

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Business social networking site LinkedIn (click ticker for report: ) announced Wednesday afternoon that it would execute a secondary public offering expected to close on September 10. LinkedIn will offer 5,381,166 shares of its Class A common stock at a price of $223 per share for proceeds of $1.2 billion. When a well-capitalized company like LinkedIn offers stock, it can often signal that the company believes its shares are overvalued. As of its most recent quarter, LinkedIn had over $800 million in cash and short-term investments against no long-term debt. The company was also free cash flow positive (albeit free cash flow wasn’t robust) in fiscal year 2012. LinkedIn isn’t in dire need of cash, so we think the company … Read more

Is the New PayPal App a Game-Changer for eBay?

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Thursday afternoon, eBay’s PayPal (click ticker for report: ) released its updated version of its iOS and Android mobile application. This release marks the latest attempt for a digital wallet to usurp the importance of the credit/debit card and “simplify” payments. By no means is this the first attempt for a company to push a digital wallet. Google Wallet (click ticker for report: ) has failed to gain much traction, not because it is exclusive to Android, but mostly because it isn’t a very intuitive program and awareness isn’t high. Apple’s Passbook (click ticker for report: ) has sneaked into the marketplace to become the fourth most popular mobile commerce app. Passbook differs from Google Wallet in the sense that … Read more

Icahn Reignites Apple

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Shares of Best Ideas portfolio and Dividend Growth portfolio holding Apple (click ticker for report: ) showed considerable relative strength following solid third quarter results July 24. Pricing momentum was augmented when legendary money manager Carl Icahn (or iCahn) sent out a series of tweets about the tech giant on August 13. iCahn Moves the Market Icahn needs no introduction, as he boasts a rumored net worth in excess of $20 billion, has engaged in numerous high-profile corporate battles (US Steel, Dell, TWA), and without question is considered one of the greatest money managers of his era. When Icahn speaks (or tweets), markets listen. While Icahn’s presence as an Apple shareholder has little, if any, fundamental change on the company, his … Read more

LinkedIn’s Powerful Network Drives Strong Results

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Thursday after the market close, business networking power LinkedIn (click ticker for report: ) announced robust second quarter results. Total revenue surged 59% year-over-year to $364 million, easily exceeding consensus estimates. Non-GAAP earnings per share swelled 137% year-over-year to $0.38, smashing consensus expectations. Free cash flow totaled $31 million, equal to 9% of total revenue. Image Source: LNKD 2Q 2013 Investor Presentation Above all, membership growth continues to be the contributing factor to LinkedIn’s success, in our view. Membership surged 9% sequentially and 37% year-over-year to 238 million users. As a result of membership expansion, LinkedIn is experiencing strong growth in unique visitors and page views. The story is simple: as LinkedIn network swells in membership, we see more advertisers, … Read more

Facebook Mobile Advertising Performs Incredibly Well

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Social network site Facebook (click ticker for report: ) reported tremendous second quarter results Wednesday after the market close. Revenue surged 53% year-over-year to $1.8 billion, easily exceeding consensus estimates. Earnings, excluding certain items, jumped 58% year-over-year to $0.58 per share. The firm generated a robust $1.05 billion in free cash flow during the second quarter, equal to 58% of revenue. Image Source: FB 2Q 2013 Earnings Slides The story for Facebook during the second quarter was the explosion in advertising growth, which surged 61% year-over-year to $1.6 billion. As we see from the above image, advertising growth was robust across all geographies, up 51% in the US & Canada, up 96% in Asia, up 53% in the struggling European … Read more

Yahoo’s Turnaround Not Progressing As Planned

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On Tuesday, Yahoo (click ticker for report: ) reported lackluster second-quarter results that showed its turnaround is not progressing as planned. The firm’s revenue (excluding traffic acquisition costs—TAC) dropped modestly from the same period a year ago, while non-GAAP income from operations fell 13% (adjusted EBITDA decreased 7%). Earnings in equity interests, which include its 24% stake in China-based Alibaba Group and 35% ownership in Yahoo Japan, advanced nearly 25% (representing one of the few bright spots in the quarter). Non-GAAP net earnings per share jumped 19%, to $0.35, better than the consensus estimate, but the performance was bolstered primarily by a reduced share count. The quarter was a low-quality beat, in our view, and we’re particularly discouraged by Yahoo’s core … Read more

iOS Gets a Facelift: Apple’s Worldwide Developers Conference

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Day 1 has passed at Best Ideas Newsletter holding Apple’s (click ticker for report: ), and we were hit with a barrage of news. The most pertinent issue of the day was the introduction of iOS 7, the iPhone and iPad’s new operating system. It is the first major overhaul of iOS, and it signals the company is serious about bringing positive changes. In addition to a new mobile operating system, Apple unveiled iTunes Radio, a streaming music service to compete with the likes of Pandora (click ticker for report: ) and Spotify. Lastly, the firm unveiled its newest Mac Pro—one of the most innovative products we’ve seen from the company in the last year. iOS 7 Image Source: Apple … Read more

Google Getting Social About Maps

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Best Ideas Newsletter holding Google (click ticker for report: ) is on the brink of making a big splash in the map space, as it is reportedly set to acquire social map application Waze for $1.3 billion. This comes after months of speculation that Apple (click ticker for report: ) and Facebook (click ticker for report: ) were also bidding to acquire the Israeli-based tech company. Although Google Maps remains a highly-regarded product, Waze is a step in a different direction. Waze differs from other map applications because it harnesses user-submitted data (largely via GPS) to provide real-time traffic and driving updates. The application provides data on traffic flow, accidents and other specific events that could slow traffic, information on … Read more

Facebook and LinkedIn Early In Monetization; Neither a Bargain

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During the past week, publicly traded social media giants Facebook (click ticker for report: ) and LinkedIn (click ticker for report: ) both reported strong first quarter results. Facebook’s revenue grew 38% year-over-year to $1.46 billion, exceeding consensus estimates, while earnings per share were flat at $0.12. LinkedIn’s revenue surged 72% year-over-year to $325 million driving earnings per share of $0.45—both figures handily better than consensus expectations. Cash flow at both companies revealed significantly different stories. LinkedIn generated roughly $59 million in free cash flow as the company’s research and development spending was kept in check. Facebook posted negative free cash flow of $12 million as the firm invested heavily in mobile, servers, and data centers. Both firms’ valuations are … Read more