Tuesday, August 1, 2017

China's manufacturing sector is strengthening after a stumble earlier this year

MONEY & MARKETS

China's manufacturing sector is strengthening after a stumble earlier this year

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DAVID SCUTT

AUG 1, 2017, 12:12 PM

image: https://edge.alluremedia.com.au/uploads/businessinsider/2016/01/man-with-weights-china.jpg

ChinaFotoPress/Getty Images

Activity levels across China’s manufacturing sectors improved modestly in July, according to the latest Caixin-IHS Markit Purchasing Manager’s Index (PMI).

The survey’s headline PMI rose to 51.1 from 50.4 in June, indicating that activity levels strengthened modestly in July.

It was the highest reading in four months.

image: https://edge.alluremedia.com.au/uploads/businessinsider/2017/08/Caixin-ihs-markit-china-manu-pmi-July-2017.jpg

Source: IHS Markit

The PMI measures changes in activity levels across China’s manufacturing sector from one month to the next. Anything above 50 signals that activity levels are improving while a reading below suggests they’re deteriorating. The distance away from 50 indicates how quickly activity levels are expanding or contracting.

The Caixin-IHS Markit survey was broadly in line with the government’s official manufacturing PMI index for July which came in at 51.4 in July.

Although both survey’s measure activity levels across China’s manufacturing sector, the Caixin-IHS Markit is a private survey that tends to focus on small and medium-sized firms.

The fact that it reported an improvement last month came as a welcome surprise given the government said activity levels for small and mid-sized firms deteriorated in its latest survey.

IHS Markit said the improvement in July was driven by improved readings on output, new orders and sales, helping to offset continued weakness in staffing levels.

“Companies indicated that both output and new orders rose at the fastest rates for five months, helped by a solid upturn in new export sales,” the group said.

“At the same time, inflationary pressures ticked up, with both input prices and output charges rising at faster rates than in June. However, companies maintained a relatively cautious stance towards employment, with staff numbers falling again in July.

IHS Markit said the reluctance of firms to add to staffing levels may have been due to a deterioration in the 12-month outlook for operating conditions which fell to the lowest levels since August last year.

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Reddit's valuation is now approaching $2 billion

Nick Vega

18h
2,099

Reddit CEO Steve Huffman Reddit

After its greatest-ever funding round, Reddit, the popular online message board is now valued at $1.8 billion.

The San Francisco-based website raised $200 million from big-name Silicon Valley investors Andreessen Horowitz, Sequoia Capital, Coatue Management, Vy Capital, Fidelity, Y Combinator President Sam Altman, and SV Angel’s Ron Conway, reports Recode.

Reddit CEO Steve Huffman told Recode the money will be used to expedite the streamlining of the website's famous home page, as well as to help Reddit break into the world of user-uploaded video.

“Reddit feels old. We don’t want to be associated with old,” Huffman told Recode.

Reddit was launched in 2005, and still looks almost exactly the same. According to Recode, the new home page will have a similar feel to Facebook's News Feed. Huffman explained that the goal is for new users to be able to visit the site for the first time and immediately understand its purpose.

The push into user-uploaded video will also allow Reddit to get in on valuable video advertising dollars. Currently, the company is not profitable.

Correction: A previous version of this story said Huffman compared Reddit's new homepage to Facebook's. It was Recode that made this comparison, not Huffman.

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Monday, July 31, 2017

Here are the metrics behind Facebook's monster second quarter

Daniel Sparks, The Motley Fool

Jul. 30, 2017, 3:01 PM
4,091

Facebook Founder and CEO Mark Zuckerberg AP

With Facebook stock rising about 42% year to date, and about 13% in the past three months, expectations were undoubtedly high ahead of the social network's second-quarter earnings release on Wednesday. But its results didn't disappoint. Driven by its rapidly rising advertising revenue, total revenue and profit both surged during the quarter.

Here's a close look at Facebook's monster second quarter, including an update on user growth, management's outlook, and more.

The Motley Fool

Revenue increased 45% year over year. Though the growth rate was down from the 49% revenue growth Facebook posted in Q2, the social network's total revenue of $9.3 billion exceeded analysts' consensus estimate for revenue of $9.2 billion.

Revenue growth during the quarter was entirely driven by growth in advertising revenue. Accounting for 98% of the quarter's revenue, advertising revenue was up 47% year over year. Facebook's "payments and other fees" revenue, which accounts for the remaining revenue, fell 20% year over year.

Since Facebook's revenue rose faster than expenses during the quarter, the company's operating margin expanded from 42% in the year-ago quarter to 47% in Q2. Facebook's sharp increase in revenue paired with its operating-margin expansion meant net income soared. Net income was up 71% year over year, helping Facebook's EPS rise an impressive 69%. Facebook's EPS of $1.32 handily surpassed a consensus analyst estimate for EPS of $1.12.

Second-quarter highlights

Prepare yourself. Here are some jaw-dropping facts from the quarter.

Instagram Stories and WhatsApp Stories each have over 250 million people using them daily.
Facebook has over 70 million businesses on Facebook and over 15 million business profiles on Instagram.
With 2.01 billion monthly active users at the end of Q2, Facebook added 294 million monthly active users in the past 12 months.
Facebook's 1.33 billion daily active users increased by 197 million since the year-ago quarter.
The average price per ad during the quarter increased 24% year over year, while the number of ads increased 19%.
Total expenses increased 33% year over year.
Facebook generated over $3.9 billion in free cash flow and ended the quarter with over $34 billion in cash and investments.

Outlook

Unsurprisingly, Facebook maintained its outlook for revenue growth to slow in the second half of the year. Facebook management has repeatedly warned investors that, during the second half of 2017, ad load growth would begin to play a less significant role in driving advertising growth, causing revenue growth rates to come down. Further, management said during the second-quarter conference call that slowing desktop ad revenue growth and Facebook's increasing emphasis on driving engagement with mobile video, an area where ad impressions are lower than Facebook's cash-cow news feed, will also play roles in bringing Facebook's revenue growth rates lower as the year progresses.

And to be sure to drive his point home, Facebook CFO David Wehner clarified during the earnings call that the social network doesn't expect the company's early efforts to monetize Messenger will offset its revenue growth headwinds.

On a positive note, Facebook's updated outlook for expenses and capital expenditures represent more moderate forecasts. Management narrowed its previous expectations for a full-year expense growth range of 40% to 50% to a range of 40% to 45%. And Facebook said it now expects its full-year capital expenditures to come in at the low end of its guidance range for $7 billion to $7.5 billion.

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Tuesday, August 1, 2017