Peter Kafka

Recent Posts by Peter Kafka

Happy Holidays! Facebook Stuffs More Ads in Its Stockings.

Facebook News Feed EventRemember a couple months ago, when Facebook said it wasn’t going to jam itself full of ads, and Wall Street freaked out?

That was silly. Of course Facebook isn’t going to jam itself full of ads — everyone there still remembers Myspace.

That said, Facebook is not averse to stocking up on ads — at certain times. Like the last few weeks, when many of its 1.1 billion users are in shopping mode.

Cantor Fitzgerald analyst Youssef Squali thinks Facebook’s ad load — the percentage of ads in the average Facebook user’s News Feed — has jumped from five percent in the last quarter to 10 percent in Q4.

It’s not unusual for Facebook to load up on ads during the end of the year — ad spending jumps everywhere in Q4 — but Squali thinks this year’s jump is qualitatively different: It “seems more amplified with bigger brands and a greater mix of higher-priced click-to-play video ads.” (Remember: Facebook has had video ads for a long time — the new ones it showed off last week, which you’ll see a lot of next year, are auto-playing ads.)

That has convinced Squali to bump up his ad estimates for the quarter, and to push his price target for the stock to $65, up from $63. Right now, Facebook is trading at $55 — right where it was before Friday morning, when the company announced a big stock sale.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik