NEW YORK (TheStreet) -- The online video advertisement market is growing fast -- and two of the biggest players in the digital ad marketplace,Google(GOOG_)(GOOGL_)andFacebook(FB_), want to be at the center of it all.
Last month, Google acquired the eight-year old video ad technology companymDialogfor an undisclosed price. A few weeks later, on Wednesday, Facebookannounced the acquisitionof a seven-year old video-ad companyLiveRail.
Both companies are trying to capitalize on the rise of the online video ad industry which could post higher growth rates than the traditional television ad market, according to Paul Ritter, chief research officer at Interactive Media Strategies.
Summary: Facebook
has recently announced the acquisition of LiveRail for reportedly between
$400mn and $500Mn.LiveRail is one of the biggest players in the online video
space that offers its unique real time bidding platform ecosystem. This is part
of a bigger trend fueled by the growth in advertising spending on online
videos, as pointed out by online video research analyst Paul Ritter.
On Wednesday,
Facebook announced that it has decided to acquire a seven-year-old
video-ad company LiveRail in an effort to increase its foothold in the video ad
business. Facebook did not disclose the terms of the deal but according to
TechCrunch, the start-up came with a price tag of between $400 million and $500
million.
Overall, the
company has hundreds of customers and delivers more than 7 billion video ads
per month. According to ComScore, in May 2014, LiveRail's video ads reached out
to 37.2% of Americans, making LiveRail the third biggest player in the
industry, ahead of AOL and Google and behind BrightRoll
and Specific Media.
LiveRail's
biggest strength is its real time bidding platform ecosystem through, which it
selects the best-priced ads for marketers from the video ad inventory of its
publishers. The company also offers …. Read full article at Seeking Alpha
A couple of days ago, the social networking siteFacebook Inc.(FB) made global headlines when it decided to purchase the mobile messaging app WhatsApp for a whopping $19 billion. The price tag is lofty by any measure. In fact, this is the biggest internet acquisition in more than 10 years.
According to the terms of the deal, Facebook will pay $12 billion instock, $4 billion in cash and $3 billion in restriction shares which will be granted to WhatsApp’s founders and employees over the next 4 years. According to data compiled byWSJ, this is extremely hefty for a company with just 55 employees. In another article, Bloombergreportedthat WhatsApp’s enormous price tag shows that Marck Zuckerberg has valued the messaging app developer like a company that makes “life-saving drugs” (since such pharmaceutical companies trade at extraordinary multiples of sales).
Reason # 1
However, this also indicates that Facebook’s founder and CEO Marck Zuckerberg will stop at nothing to keep his company growing by buying out the competition. WhatsApp competes with some of the biggest mobile messaging apps such as Tencent’s WeChat and Facebook’s own Facebook messenger.
With this kind of aggressive attitude, Facebook’s shareholders should be glad that Mark Zuckerberg is at the helm of the affairs.
In the final week of June, Zynga(NASDAQ: ZNGA) announced that another key member of the organization, Andy Tian, the head of its Beijing game studio, was leaving the company. As a result, shares dropped by nearly 7%, touching a five month low. But then, it announced the arrival of Don Mattrick and its stock rallied. The company is moving forward in its “year of transition” that now includes a leadership change, in addition to cost-cutting measures and the strategic shift from developing only casual games.
King of console gaming
In the beginning of July, Zynga revealed that its founder and CEO, Mark Pincus, is stepping aside. He will be replaced by Don Mattrick, an Electronic Arts(NASDAQ: EA) veteran and the head of Microsoft’s Xbox unit, who will steer the struggling game developer out of the crisis. Mark Pincus’s departure hasn’t surprised anyone, as he wasn’t shareholders' or employees' favorite. Moreover, the company’s performance, particularly the previous results reported in April when its sales plunged by 30%, expedited Pincus’s exit.
Since the beginning of 2012 till the end of April this year, the shares of the leading professional social networking site LinkedIn(NYSE:LNKD) soared rising by nearly 200% as its price-earnings ratio, or P/E, climbed to nearly 1,000. Then it released its results for the first quarter of 2013 which showed strong profit growth but gave lackluster guidance which caused a 13% drop in its stock on Friday, 3rd May. The business has delivered several strong quarters in the past; therefore the markets were expecting greater things from them in the future.
Facebook’s shares have fallen again as
concerns start to emerge about information disclosed to investors prior to the
IPO.
Facebook’s shares have fallen again by
9% as regulators suspect that some investors might have been treated favorably during
the disclosure process. The shares closed at $31 on Tuesday, more than 18% less
than the offering price. The Securities and Exchange Commission (SEC) and the
Financial Industries Regulatory Authority (FINRA) have decided to review the
process. SEC Chairwoman Mary Schapiro, while
speaking with the press said, “There is a lot of reason to have confidence in
our markets and the integrity of how they operate, but there are issues we need
to look at specifically with regard to Facebook,”
The lead underwriter of the IPO Morgan
Stanley (MS) maintains that the IPO was "in compliance with all applicable
regulations". Pen Pendleton, spokesperson for MS, wrote that the company “followed
the same procedures for the Facebook offering that it follows for all IPOs,”
Analysts have long suspected Wall
Street of extending unethical and illegal support to big investors. A shocking
news that was revealed earlier this week has all but confirmed Wall Street’s
questionable practices. Morgan Stanley (MS) had reduced Facebook’s future
revenues forecast, just days before the IPO, a crucial piece of information
that failed to reach the small investors, but Reuters has reported that the
information was passed on to MS’s major clients. Other underwriters of the IPO,
Goldman Sachs and JPMorgan Chase had also reduced the company’s future revenue
expectations.
In short, 'institutional investors
received valuable information that retail investors did not', but this is not a surprise,
it happens every day and in each IPO, all the small investors are aware of this
situation. Most consider it as one of the primary issues facing this industry,
not just in U.S. but around the world.
Overvalued
There are literally dozens of analysts
who are convinced that “Facebook is
overvalued”. Thomson Reuters Starmine had predicted 10.8% annual growth
rate for Facebook. The figure is not an exaggeration neither an understatement
as this is almost exactly similar to the average annual growth rate of technology
sector. At 10.8%, Facebook’s share price comes down to just $9.59 per share.
Facebook, Morgan Stanley and Nasdaq
are all pulled together in this scandal, but Nasdaq’s executives and its
shareholders aren’t worried about the situation. On its exchange operators
annual meeting, none of the top executives received any questions from the
shareholders regarding its handling of the Facebook IPO. Nasdaq’s CEO Bob
Greifeld was quoted as saying "While clearly we had mistakes in the
Facebook listing, we still want to highlight the fact that it was the largest
IPO ever and on Friday of last week, we processed over 570 million
shares,"
On the other hand Richard Laermer, CEO
of ThankBank, who has invested a considerable sum in Facebook’s IPO believes
that the investors will turn out to be winners in the long run. He said, "There's
no way I will ever lose money off a stock from a network with 900 million
users. It's not physically possible,"
Worst IPO of the decade
(Updated 26th May, 2012) After five days of trading, Facebook's IPO is now, according to Bloomberg, the "worst IPO of the decade". Furthermore, the current forecast presents tougher times ahead. Bloomberg has compared the current IPO with some previous failed IPOs, including that of MF Global which holds the spot for eighth largest U.S. bankruptcy. Interestingly, 'problems with the IPO' started even before the IPO had officially begun. Apparently, NASDAQ's had some issues with their software which delayed the IPO by about half an hour. This caused some confusion among brokers who weren't sure whether their clients orders were processed. The table below shows the percentage increase or decrease in share prices from the IPO price in five days of trading. Facebook came down from $38 to $33.03
