What to Watch for in Facebook's Third-Quarter Results

The video discusses Facebook's advertising revenue growth, driven by Instagram and e-commerce, and highlights investment risks related to ambitious projects like VR and data centers. It examines the competitive landscape of mobile advertising, with Facebook and Google dominating the market. The video also analyzes Facebook's valuation, noting a compressed PE multiple despite healthy growth, and emphasizes the importance of sustaining engagement and growth expectations.

What are the main drivers of Facebook's advertising revenue growth?

• Mobile games and apps

• Television ads and print media

• Virtual reality and data centers

• Instagram video and e-commerce

What is a significant risk for large cap Internet companies like Facebook?

• Ambitious investments and their impact on margins

• Lack of innovation in product offerings

• Increased competition from small startups

• Decline in user engagement

What is the potential future battle in the advertising industry?

• Between social media and search engine ads

• Between video ad dollars on television and mobile platforms

• Between local and international ad markets

• Between print and digital ads

How is Facebook's stock currently valued?

• Through its market share in e-commerce

• Using PE multiple and EV to free cash flow

• Based on user engagement metrics

• By its number of active users

What could cause Facebook's stock multiple to increase?

• A decline in mobile advertising

• Increased competition from Google

• Meeting and exceeding growth expectations

• A decrease in advertising revenue