As I mentioned this morning, J.P. Morgan analyst Doug Anmuth today reiterated an Overweight rating on shares of Facebook (FB), and a $35 price target, writing that the underperformance of the stock since its January earnings report — it is down 16% since that the close of that day, and down 1% for the year so far — is all about fears of weakening engagement as competing social networking services such as WhatsApp and Snapchat and Twitter take away people�s attention.
But Anmuth, writes that competing services are having a minimal impact, according to data. He urges investors to take advantage of the stock�s recent weakness. The note lifted Facebook stock 83 cents, or 3.3%, today, to close at $26.25.
Anmuth briefly notes what the “engagement metrics” looked like at the end of Q4:
Facebook ended 4Q12 with 1.06B MAUs and 618M DAUs, a DAU/MAU ratio of 58.5%, up from 57.2% in 4Q11 and 58.0% in 3Q12; Facebook noted that L6 of 7�users who visit the site in 6 of the last 7 days�was at a record high. In measuring Likes on a page as a form of engagement, Facebook noted that it only saw a 2% negative impact in Likes on pages with ads, suggesting limited overall pushback from users. And over the past year, product changes and ranking improvements led to a roughly 50% increase in the amount of feedback in the News Feed.
Anmuth then writes that Facebook's share of time spent online is rising, not falling, based on data from comScore, for both desktop and mobile use:
Overall, our analysis of comScore Desktop and Smartphone data inthe US suggests that Facebook continues to increase its share of total Internet minutes, without seeing any material impact from these other services. According to comScore, Facebook has increased its total minutes 22% to 114.3B minutes in February 2013, up from 93.5B in March 2012. During that time Facebook�s share of total minutes across both desktop and mobile (smartphones only�excluding tablets) grew to 14.8% in February 2013, up from 12.7% in March 2012. Over this same period, services characterized as non-Facebook including Instagram, Twitter, WhatsApp, and Snapchat have increased their share of total Internet minutes from 0.6% to 1.8%
Anmuth offers a chart of how Facebook stacks up to competitors (click to see at larger resolution):
Anmuth also sees minutes spent with Facebook by each unique visitor rising, even as minutes decline on the desktop, and argues Facebook is capturing more total mobile minutes spent on the Internet than are other services:
While desktop minutes per UV have declined from 391 minutes in March 2012 to 320 in February 2013, mobile minutes per UV have increased from 435 to 785 over the same period. When comparing Facebook�s minutes to the same set of non-Facebook social networks and services mentioned above, we can see that within mobile (smartphone only) minutes, Facebook continues to take share of total Internet mobile minutes while non-Facebook has remained relatively flat at ~4% since July 2012.
And here's Anmuth's chart of those minutes per user:
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