Wednesday October 29

• Facebook's shares fell 10% on forecasts of higher spending, lower growth, despite beating earnings expectations (Q3 rev: $3.2B, Y/Y 59%, net income $806M, Y/Y 90%). The firm forecast revenue growth of 40% to 47% in Q4 2014, down sharply from 59% in Q3. CFO Dave Wehner also warned that the social network is preparing for a 55% to 75% spike in expenses next year, when the world's largest social network intends to invest in Whatsapp, Oculus and other products that have yet to show a profit. Facebook declined to provide any estimates for its expected pace of revenue growth in 2015, adding to investor worries. "Giving expense guidance without giving revenue guidance is frustrating and spooking The Street," said BTIG analyst Richard Greenfield. "The multi-billion dollar question is what’s revenue growth going to look like next year," he said.

• As Facebook stock has risen, the cost of the Whatsapp acquisition has risen too: from $16B ($4B in cash, $12B in FB stock) originally to $21.8B: For this, Facebook offered $4 billion in cash and $12 billion in stock, with the company’s founders eligible for an additional $3 billion in restricted stock. But as Facebook’s own stock has continued to rise, so has the value of the deal. The final tally came in at $21.8 billion, as the Deal Professor noted this month. WhatsApp reported a meager $10.2 million in revenue last year, but has 600M users. Mark Zuckerberg spoke about how he wanted to take the mobile messaging app quickly to a billion users from 600 million. (“For us, products really don’t get that interesting to turn into businesses until they have about one billion people using them,” he said.)

• Facebook engagement ticked up; but the firm sidestepped Snapchat-inspired questions on teen engagement: Facebook, already the world’s largest social network, said it had 1.35 billion monthly users in September, up from 1.32 billion in June, and 64 percent of them used the service daily, up slightly from the second quarter. The firm however did not field the one question that could have instilled confidence…or sent it into a death spiral: teen engagement. The company refused to break out any data about usage levels of teens, which are widely thought to be abandoning Facebook for apps like Snapchat. When asked about engagement for different demographics, Facebook’s CFO David Wehner said the company had nothing to report on specific cohorts of users. That was probably smart. A year ago when ex-CFO David Ebersman said Facebook “did see a decrease in daily users specifically among younger teens,” the share price plummeted despite an otherwise killer quarter.

• Meanwhile Renren (in 2011 touted as the Facebook of China) serves as a cautionary reminder that valuations can be fleeting:  Renren Inc. (RENN) was touted the Facebook Inc. of China when it debuted in New York in 2011. Today it’s looking more like online flameout Myspace. The stock has lost more than three quarters of its value since 2011. “When Renren appeared, students like me added as many friends as possible, but you get tired scrolling through horoscopes and advertisements searching for original content, because WeChat looked like a more enticing platform for posting news and reading comments,” Hou said by phone on Oct. 21. “It was the same with Myspace: you log in, you scroll through your newsfeed -- to find out that all the interesting conversations are happening on Facebook.” Three years after the IPO, the networking website’s valuation has fallen to less than eight times sales. The 24-year-old still checks her Renren account about three times a week, though for WeChat “it’s every hour,” she said. Monthly unique users decreased to about 44 million as of June, Renren said in a statement in August. That compares with more than 438 million monthly active users for WeChat and 157 million users for Weibo, a Twitter-like microblogging service controlled by Sina Corp.