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Updating Facebook Shares’ Status

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    Raymond James senior Internet analyst Aaron Kessler on the outlook for Facebook.

  • Duration 4:44
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And well investors are liking FaceBook today shares are rising more than 2% after Raymond James upgraded the social media giant to an outperform.

From market perform price target going to 38 dollars a share joining me now from San Francisco the analysts -- the exact costs Cary castle in the first on fox.

This -- to -- I think the headline -- at 38 dollars a share.

That was the IPO.

But but as FaceBook back you say this.

-- -- we think it has I think -- key negative thing for investors are there was that there are monetizing especially mobile.

Mobile was basically zero revenues in Q2 is 14% of revenues in Q3 -- of inflection point.

Always exactly go to -- 5% or so of revenues in Q4.

And 30% plaza revenues and 2013 so.

The big negative comment at conception was that FaceBook and -- monetize especially mobile.

We're seeing that change recently we've been some -- and we're also seeing.

New ad formats whether it's a new speed mobile.

FaceBook exchange all get good traction from march six.

For monthly.

Subscribers on the mobile side of course -- on -- more than a billion subscribers.

Internationally.

With regards to FaceBook but I think the big question here is the monetization of that mobile -- mean you're looking for that's a massive spread you're talking about -- quarter.

To fourth quarter those numbers that we get out on Wednesday when it comes to.

The ad revenues mobile was -- -- in the third quarter fair enough.

But -- we see how do you see that they get the jump.

And mobile advertising worst gonna come from here.

Yes a mobile is 14% roughly for the full quarter in Q3 but it ended the quarter about three million dollar per day run rates about 270 million dollars.

We're projecting Mobil's roughly 350 million dollars during Q force of makes you -- bigger jump but it's if you look at where and -- Q3 I would think appear reasonable of the let especially given the seasonal -- That we typically see during Q4.

You know -- -- -- was mobile think this for a moment is having its -- comScore.

Named in FaceBook the top mobile -- ahead of Google Maps and so FaceBook really is making that.

A huge jump when it comes to mobile subscribers.

If we do get a solid number on Wednesday if there is a lot of momentum in the stock hop -- the stock go above that thirty dollar price target is -- in a guesstimate the fuel -- Yeah -- -- twelve month target is 12014 numbers we things don't think there is some upside to our numbers -- we have our above mystery at current levels so.

We think event at the numbers can continue to beat handily vs our estimates the stock can't go above our estimate that -- right now we're sticking with the 38 dollar target.

I haven't tried -- at a given girl credit here for trial let's talk about something else and this is obviously Yahoo! is another big earnings story this week and I'm.

Walled garden approach that we saw Yahoo! and AOL go for.

Over a decade and that's getting everyone into FaceBook and doing everything on FaceBook shopping.

A communications.

All of that mean is that -- that -- this list companies trying to have worn if so can they do it.

Yet we face but still largely in experimentation phase I think bid to some extent they would like that have that control.

That are on the other hand they are partner for lot of areas whether it's music entertainment.

Or shopping their partner with -- different companies and you could even argue that they're helping potential competition whether it's interest by enabling.

Could have companies like that he used FaceBook status.

I wanna say it's a completely -- guard and a significant right strategy in terms of partnership.

And focusing on a platform thus far.

When would when we get these earnings then I wanna ask you this now so that we can prepare ourselves -- What is the one that if there was one negative surprise are concerned about on the earnings Aaron what would it be.

Yes -- -- -- surprise look pension and I guess likely to payments revenues were looking for about 250 million dollars in the payments revenue side.

Gaming business is likely continue to be weak so gaming has that did well Tristan desktop it doesn't translate as votes on mobile for FaceBook.

So I think that'll continue to be ahead when near term so we think investors are more focused on the positive advertising surprise will likely say.

But W want potential risk is on the -- -- side or gaming revenues.

I like your militants on the stock -- -- if you look David -- to the bears an evaluation is still.

Something that FaceBook gets criticized.

Four -- responded up.

Yet having -- in the gave the soccer is that what about 38 dollars back and in the summer months some were prepared thirtieth our target.

Which essentially IPO price but -- in -- -- a year out there right now usually -- eighteen times ebitda.

That's in line with that -- the peer group of Internet companies so.

They may went out at a premium but when you have 12014 numbers -- on higher estimates now we think the virus is more reasonable to.

Stock up 60% in three months since it's been fascinating to watch that stock IPO -- now Eric Kessler Raymond James senior Internet analyst at upgrade today Aaron thank you.

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