Key positions traded by Renaissance Technologies in 3Q14 (Part 6 of 10)
Renaissance Technologies and Facebook
Renaissance increased its position in Facebook (FB) during 3Q14. The stock accounts for 0.496% of the firm’s total portfolio—up from 0.245% of the fund’s 2Q14 portfolio.
Facebook’s stock declines after earnings announcement
FB’s revenue for 3Q14 totaled $3.20 billion. This shows an increase of 59% from $2.02 billion in 3Q13.
Advertising revenue grew by 64% year-over-year, or YoY. Mobile advertising revenue represented ~66% of advertising revenue for 3Q14—up from ~49% of advertising revenue in 3Q13. GAAP (generally accepted accounting principles) net income for 3Q14 was up 90%—compared to 3Q13.
Daily active users, or DAUs, grew by 19% YoY. Monthly active users, or MAUs, increased by 14% YoY. Mobile DAUs and mobile MAUs were up by 39% and 29% YoY, respectively.
Even though FB maintained strong revenue growth throughout the year, the stock declined by 7% on the day the company announced its earnings. The company’s outlook, 4Q14 revenue growth, and increased operating expenses for 2015 disappointed investors.
Management expects the company’s total 4Q14 revenue to grow 40%–47%—compared to the revenue growth rate of 76% during the same quarter last year. Also, FB believes that its operating expenses will increase considerably next year due to the company’s investments in a broad range of areas:
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WhatsApp
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Oculus VR
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video
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org
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ad tech initiatives
Atlas is an important tool for FB
In October 2014, FB relaunched Atlas. Atlas is the ad server that it bought from Microsoft (MSFT) last year. Facebook believes that Atlas will help advertisers improve online campaign measurement and achieve better investment returns by providing relevant ads to users.
FB gets the majority of its revenues from mobile traffic. So, Atlas is an important tool for the company. Mobile revenue share increased from 49% in 3Q13 to 66% in 3Q14.
FB app used the most
FB continues to have the leading mobile app. According to a report from comScore, the number of unique visitors on the FB app was ~115 million in June 2014. Several Google apps rank next in terms of unique visits.
FB investing heavily to improve Instagram
Last year, FB acquired Instagram for $1 billion. During a recent conference call, FB’s management said that the company is progressing well with Instagram. FB is making a substantial investment in Instagram to improve the speed and performance of the photo-sharing app on Android.
During the last quarter, Instagram launched the Hyperlapse app on Apple’s (AAPL) iOS to capture high-quality videos even while in motion.