Social networking stocks are breaking the "bubble" remarks with bright performance step by step

Dai Jinhong

Instead of breaking the "bubble" of Internet tech stocks that panicked the market, it has become more and more real. Social networking stocks are breaking the "bubble" speech step by step through their brilliant performance.

US Eastern Time Tuesday, US stock Twitter (TWTR.NYSE) second quarter earnings will be released soon, market analysts pointed out that previously belong to social networking shares of Facebook (FB.NASDAQ), microblogging (WB.NASDAQ) performance far exceeded Expected, coupled with the Line IPO soon, the United States social networking stocks or generals will rise Internet technology sector, and break the previous panic remarks.

Performance eye-catching

Market participants have high hopes for the upcoming second-quarter earnings report.

Analysts expect their second-quarter sales to grow substantially, with analysts on average expecting a second-quarter loss of 1 cent per share for Twitter compared to a loss of 12 cents per share for the same period last year. Operating income or Up 100% YoY to US $ 283.4 million from US $ 139.3 million in the same period of last year.

RBC Capital Markets analyst Mark Mahaney reiterated Twitter's "Outperform" rating in its research report, saying it has the ability to become one of the leading internet companies with Google, Facebook, etc. The company shoulder to shoulder.

And Facebook as of June 30 in the second quarter of 2014 earnings report, its second quarter operating income reached 2.91 billion US dollars, 1.813 billion US dollars over the same period last year increased by 61%; net profit reached 791 million US dollars, compared with the same period last year The amount of 333 million U.S. dollars increased by 138%.

Facebook chief operating officer Shirley Sandberg said the same day, the company currently has 1.5 million advertisers, advertising business in all geographical areas have strong growth. "Our existing customers spend more on advertising and new customers keep adding." In the quarter, Facebook's advertising revenue was 2.68 billion U.S. dollars, up 67% from a year earlier.

With the affirmation of Facebook's profitability, its share price has risen from around 18 US dollars to the current 75.19 US dollars, an increase of 317%.

Meanwhile, Weibo, as a Chinese social networking unit, has not yet lost money, but its latest earnings report shows a sharp increase in net operating revenue, advertising and marketing revenue, and revenue from value-added services, which may be a matter of time.

Analysts pointed out that Internet technology stocks, especially social networking stocks, how to expand its user base and how to use the customer base for profit-making activities is the main problem. In recent years, Facebook, Weibo and Twitter have all started to take advantage of their rich customer base, and their profitability is constantly improving, making their prospects even broader.

Break the valuation "bubble"

Despite the popularity of social network stocks today, I still remember the market opposition to Facebook's listing more than two years ago.

At that time Facebook's market has been much concerned about the market, partly because of its high valuation, Google and Microsoft in 2011 were 20 times earnings and 11 times, but Facebook earnings up to 100 times. In addition, in 2011 Google and Apple's market sales (total market capitalization / main business revenue) were only 5 times and 4 times, while Facebook is up 27 times.

On the other hand, when Facebook went public, the outside world questioned the sustainability of its earnings because, despite its growing number of users, its profitability did not show any significant improvement. This also means that Facebook is not able to convert the number of users into due profit.

Such a high valuation, so that the outside world once thought that has not fully converted the number of users to the company's Facebook a little "false big empty", "not worth the investment." Forbes even reminds readers not to buy the stock in its article, saying that "Facebook is the market peaked in the IPO market, only to fall."

However, with the passage of time, once the "ugly duckling" finally gorgeous transform.

Such stories are common in the US stock market, and now the Internet technology giant stocks - Google, also suffered valuation "bubble theory" harassment. However, looking back now at Google's stock price, where there is a bubble shadow, basically all step by step to stabilize the stock price rhythm.

According to foreign media reports, mobile messaging application developer Line will work with Nomura Securities and Morgan Stanley, and is preparing for an initial public offering in November this year (IPO). According to sources, Line considered trading on the Tokyo Stock Exchange, the New York Stock Exchange or the Nasdaq. As Japan's most popular mobile messaging applications, Line market value may exceed 1 trillion yen (about 9.8 billion US dollars).

So Facebook high valuation traps that year will appear in the body?

Analysts pointed out that as of April 1 this year, Line registered users reached 400 million. Such a broad user base is its most important basis, if the IPO file to reflect its excellent profitability, then such a valuation in the social networking class of stock is not high.

In view of this, the "bubble theory" of Internet technology stocks will also be broken one by one on the premise of its outstanding performance in the course of a step-by-step rise of US stocks.