Facebook, Inc. Earnings: 1 Number You Need to Know

A Fool takes a closer look at Facebook's earnings report and reveals the one number that investors need to pay attention to now.

Feb 11, 2014 at 2:00PM

Facebook's (NASDAQ:FB) earnings report might be even more impressive than you think, Fool contributor Tim Beyers says in the following video.

Why? Tim cites one number: 77.7, which represents gross margin for 2013 and a multiyear high for Facebook as a business. Revenue from desktop and mobile sources soared over the same period and operating cash flow more than doubled, suggesting that "likes" have become an important currency in the business of marketing and advertising. The stock rallied more than 16% following the report.

But there's also more to the margin story than mere growth, Tim says. Facebook CEO Mark Zuckerberg and team may also be benefiting from their involvement in the Open Compute Project, which purports to reimagine how we think of servers and data centers and cut costs in the process.

Here, the proof is in the numbers. By using a mixture of lower-cost parts, innovative data center designs, and homegrown software, Facebook -- like Google (NASDAQ:GOOGL) -- appears to have figured out how to put more processing power to work in service of users, but at a lower cost than in earlier years. The result? Gross margins expand as the network grows, a virtuous cycle that Tim says could continue for many years.

Now it's your turn to weigh in. What did you think of Facebook's earnings report? Please watch the video to get Tim's full take and then leave a comment to let us know whether you would buy, sell, or short Facebook stock at current prices.

The next Facebook is still out there
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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends and owns shares of Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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