Lone Pine Adds to Its Stake in Facebook



Lone Pine raises stake in Facebook

Lone Pine upped its position in Facebook (FB) in the fourth quarter of 2014. The position accounts for 4.42% of the fund’s total fourth quarter portfolio. The fund owns 13,502,615 shares, up from 8,638,513 shares in the previous quarter.

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Overview of Facebook

Facebook is a global social networking channel with 1.39 billion total users and 890 million daily active users worldwide as of December 2014. The company generates substantial revenue from advertising and fees associated with its payment infrastructure. This enables Facebook users to purchase virtual and digital goods from developers.

In 2014, Facebook acquired WhatsApp and Oculus to improve its next generation of communication and computing platforms.

Mobile is Facebook’s primary growth driver, with ~1.19 billion people accessing the site on mobile devices. The company’s Instagram, Messenger, and WhatsApp platforms crossed 300 million, 500 million, and 700 million monthly active users, respectively.

You can gain exposure to Facebook by investing in the Technology Select Sector SPDR Fund (XLK) and the PowerShares QQQ Trust ETF (QQQ). Facebook accounts for 4.068% and 3.46% of XLK and QQQ, respectively. It also accounts for 4.60% of the iShares US Technology ETF (IYW).

Mobile users are the main revenue drivers

During 4Q14, Facebook’s revenue grew 53% YoY (year-over-year) to $3.9 billion, and its ad revenue was $3.6 billion. Mobile ad revenue was up 108% to $2.5 billion. Mobile ad revenue accounted for 69% of its total ad revenue—compared to 66% in 3Q14 and 53% in 4Q13. As of December 31, 2014, 745 million people used Facebook daily through mobile devices, a 34% increase YoY.

In 4Q14, Facebook expanded its autoplay video ads, garnering many clients during the holiday season.

According to eMarketer, Facebook’s share of global mobile advertising revenue could increase from just 5% in 2012 to about 22% in 2014. Meanwhile, Google’s (GOOG) (GOOGL) share could decline from 53% in 2012 to 47% by 2014. Even Twitter’s (TWTR) share could increase from 1.5% in 2012 to 2.6% in 2014. Pandora, YP, and Millennial Media’s (MM) shares are expected to decline.

In-depth details on Facebook’s 4Q14 earnings are contained in the Market Realist series Facebook’s Q4 2014 earnings: Key updates for investors.

The next part of the series will discuss the fund’s position increase in Dollar General.


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