WEEKLY STOCK PERFORMANCE
The social media sector has roared so far in 2013 with an average gain of 6% this week as institutional interest intensified. P and WEBM (the parent company of SocialTimes) led the group with gains of 16% and 15%, respectively, although these moves were not news driven.
FB had an impressive gain of 11% largely as a result of the new buoyant outlook from several research analysts on opportunities in mobile and Gifts for 2013. The company was also able to capitalize on a somewhat quiet week of news for the rest of the sector by rolling out voice messages capability in Facebook Messages and by launching the test of a new free VOIP service in Canada.
CHANGE
SINCE DEC 28
CHANGE
SINCE DEC 28
P
WEBM
YELP
RENN
ZNGA
FB
GRPN
SINA
16.0%
15.2%
14.0%
13.9%
12.9%
11.0%
10.3%
9.1%
BIDU
LNKD
YHOO
WEBM
FB
GRPN
YELP
ZNGA
8.7%
5.7%
5.7%
5.4%
1.8%
0.3%
0.2%

(2.1%)
COMMENTARY
Volume in Early 2013
  • With Q4/12 earnings around the corner, interest in the sector is heightened. The daily trading volume in 2013 for social media stocks increased by 18% when compared to the daily average in December 2012. ANGI, YELP, OPEN, and JIVE posted the biggest increases with volume gains of 80%, 69%, 52%, and 35%, respectively.
  • Compared to the full year of 2012, the daily trading volume for social media stocks in 2013 increased by 15%. P, YELP, GRPN, and ANGI had the biggest increases with gains of 79%, 60%, 35%, and 33%, respectively. All signs point to a wild ride for the sector for the early part of 2013 as the volume pattern will likely follow 2012’s, which saw greater trading and higher volatility in the early part of the year.
Volatility in Early 2013
  • We have been making the case that volatility in the social media sector can lead to opportunities for share appreciation that are perhaps more compelling than that of any other industry. Counting only within the three trading days of 2013 thus far, the average difference from low to high trading prices is 8% for the sector.
  • Meaning, if an investor purchased social media securities in the last three trading days at the low price and sold at the high price, they could expect a one-week gain of 8% on average. WEBM (the parent company of SocialTimes) and Pandora showed the largest differentials (and arguably, investment opportunities) during this week with differentials of 17% and 15%, respectively.
  • The top five stocks in the sector had greater than 10% differentials this week and the data suggests that if investors can sift through the abnormal noise in social media in terms of news and developments, there are incredibly significant investment opportunities every week within the sector.
KEY DEVELOPMENTS IN SOCIAL & INTERNET
Facebook
Data
Mobile news feed ads on FB promoting apps showed early effectiveness with average click-through-rates of 0.5% and less than $3 costs per install, based on data from a four week campaign by AdParlor from a large unnamed gaming company.

Product
FB began testing a free mobile VOIP service in Canada for iOS users.

Product
Facebook Messages for iOS and Android was updated to allow users to send short voice messages (less than 60 seconds).

Amazon
Deal
A+E Networks signed an agreement to license content to AMZN which includes prior seasons of programs on A&E, The Biography Channel, The History Channel, and Lifetime, taking the Prime Instant Video service to more than 33,000 movies and TV episodes.

People
Blake Kirkorian, co-founder of Slingbox maker Sling Media, resigned from the AMZN’s board as MSFT acquired a company he founded called R2 Studios, which is focused on media-sharing with technology expertise on the control of electronic devices (which might have interesting synergies with the Xbox franchise).

Apple
Deal
Despite rumors that AAPL would spend $500m to acquire Waze, a private company with a mobile navigation app, to help improve the glitchy Apple Maps, no deal was announced.

Data
Strategy Analytics forecasts that AAPL’s smartphone sales will total 180m in 2013 (21% of the market vs. 20% in 2012), unless it surprises and releases an iPhone mini (cheaper iPhone model) this year.

comscore
Data
comScore data showed that U.S. online commerce was $42.3b from November 1 to December 31 in 2012, which was a 14% increase from 2011.

emarketer
Data
Worldwide mobile ad spending (in display and search) was $8.4b in 2012, an increase of over 100% compared to 2011, according to data from eMarketer, with the most rapid increase coming in the U.S. market. The company also projected worldwide spending to increase to ~$37b by 2016.

Data
Marketer estimated that worldwide total media ad spending increased 5.4% in 2012 to ~$519b compared to a 3.6% increase in 2011, and for total media spending to grow to $628b in 2016.

google
Legal
The company reached a settlement with the FTC over its longstanding antitrust case in which it agreed to make relatively minor changes to business practices such as content scraping and exporting of ad data.

Censorship
GOOG disabled a feature that notified users of its search service in China when a keyword had been censored by the Chinese government’s internet controls without any statement or explanation.

Glitch
It appears that an agency of the Turkish government may have temporarily switched GOOG’s webpages for their own, potentially to increase surveillance data on government employees.

hulu
People
After months of rumors, Jason Kilar, Hulu’s CEO, will be leaving the company sometime this quarter. In addition, the company’s CTO, Rich Tom, will also resign in the same timeframe.

neilson
Deal
A new report indicated that digital music now accounts for 56% of all music sales in the U.S. in 2012 (compiling albums and track equivalent albums) compared to 50% in 2011.

pinterest
Deal
The company made its first acquisition by acquiring Punchfork, a recipe-sharing site, for an undisclosed amount. Punchfork will be shutdown shortly and the Pinterest-style recipe sharing will be integrated into Pinterest itself.

spotify
Strategy
Spotify halted the ability for users to purchase music via downloads in its European markets (a feature that was never rolled out in the U.S.) to better streamline its overall music streaming service.

yahoo
Strategy
YHOO completed its exit of the South Korean market by closing its portal there and cutting over 200 personnel.

yelp
Legal
In an effort to preserve free speech online, the Virginia Supreme Court overturned a preliminary injunction in a lawsuit over a Virginia woman’s negative online review of a local contractor.

zynga
Strategy
As noted several months ago, ZNGA continues to execute its downsizing with 11 titles now effectively shutdown or in the process of shutdown, including PetVille and Mafia Wars 2

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