Peter Kafka

Recent Posts by Peter Kafka

Here’s a Facebook Defender — J.P. Morgan Thinks Mobile Ads Pass $900 Million Next Year

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Cheer up, David Ebersman. Here’s someone in New York who likes you: J.P. Morgan analyst Doug Anmuth thinks Facebook will be worth $30 a share — about 66 percent more than the battered stock is trading at this morning.

Yes, that’s a steep haircut from the $45 target Anmuth has had on the stock since June 27, when he first recommended the stock.

But, in a report published this morning, the analyst is still bullish on the social network, with an “overweight” rating.

Part of that is because Anmuth is less freaked out by the coming flood of Facebook shares as shareholder lockup rules expire in the new few months. He thinks Ebersman will be making a $2.2 billion “de facto share repurchase,” which will take about 120 million shares off the market.

The more important part of Anmuth’s bull case is that he thinks Facebook’s ad strategy is working, and has lots of upside. He’s bumping his ad revenue estimates up, and thinks the mobile ads Mark Zuckerberg started selling this year will approach $1 billion by the end of 2013.

Here’s Anmuth’s’ projections for Facebook’s mobile ads and “sponsored stories” ads — the ones Facebook users see in their newsfeeds (click table to enlarge):

And here’s his take on Facebook’s “marketplace” ads — the ones you see on the right-hand side of your page, which will become less important to the company over time:

If all that pans out, Anmuth figures that Facebook will be generating EBITDA of $4.2 billion in 2014. And if the company gets back to $30 a share, that would mean Facebook would trade at the same 15x multiple investors assign to Amazon, he notes.

Anmuth isn’t the first person to make the hopeful “Maybe Mark Zuckerberg is Jeff Bezos with more hair” analogy. Trivia question: Who was Amazon’s original CFO?


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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google