CLSA Defends Poor Facebook-AdParlor Metrics, Says This Isn't The End Of The Story

Facebook Inc FB's stock was highly volatile on Wednesday and was lower by 4 percent.

Facebook's sell-off was attributed to reports from AdParlor, a social and video advertising platform. The organization was reported to have said during a conference call with analysts at CLSA that its ad spend on Facebook was down 18 percent quarter-over-quarter.

While investors and traders took a bearish stance towards the social media giant, some came to its defense.

Andrew Peebles, a former Facebook employee, commented in a series of Tweets.

"$FB is ALWAYS down QoQ when going from Q4-Q1. That is how digital advertising works. Seasonal. Q4-Q1 never pos… Q1 2015 saw -8% rev QoQ and -17% net inc QoQ. This is an overreaction by people who don't know the business… #AdParlor also doesnt touch the Rift, Gear VR, or 100% of $FB ad inventory."

CLSA Responds

An analyst at CLSA responded to Wednesday's commentary. According to the analyst, while AdParlor is a "small, $100 million a year in revenue" company, it's still a "good indicator" of ad buying behavior.

"More branded business and less gaming/e-commerce means a stronger 4Q and weaker 1Q; this came out on the call," the analyst wrote. "Post the call however, AdParlor went on the tape describing the data discussed on our call as incomplete and out of context."

The analyst added he has heard from second-hand sources that AdParlor is saying its normalized business was only lower by 3 percent quarter-over-quarter, not the 18 percent figure mentioned during the conference call.

The analyst added he does not believe any commentary issued during the call was erroneous or out of context. In fact, the call was "thoughtful and balanced." However, the analyst did conclude by stating "this is not the end of this story."

Shares of Facebook were trading higher by nearly 1 percent late Thursday morning.

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