9/13/2013 2:27 PM ET|
Facebook is worth the risk
Mark Zuckerberg proves the naysayers wrong.
The good news, however, about the Palo Alto, Calif. company is that there is more good news to come. The reason why there is reason to be excited about Facebook can be summed up in one word: mobile.Chief Executive Mark Zuckerberg has just begun to scratch the surface of the surging popularity of smartphones and tablets. As Bloomberg News recently noted, Facebook has spent more that a year rolling out new advertising services to reach users of mobile devices. His efforts have reaped benefits already.
Mobile made up 41% of ad revenue in the second quarter, an increase from 30% on a year-over-year basis. That going to increase in the coming months and years as people get more comfortable with using their devices to make purchases. Facebook has about a 13% share of the global mobile advertising market, a distant second to Google’s 56%, which underscores the company’s huge potential for growth.
Facebook is a company that Wall Street has had difficulty figuring out. When it floundered after its much-hyped IPO, many pundits left it for dead. Though the company has proven the naysayers wrong -- for now -- Facebook is clearly not a stock for everyone.
The shares, which have surged more than 114% over the past year, are expensive, trading at a price-to-earnings multiple topping 200. Facebook is also a "momentum stock" that can make dramatic price moves at the drop of a hat.
But if you are the type of person who is willing to go with to your gut, the time to invest in Facebook is now. Zuckerberg has proven the skeptics wrong once and could do so again.
And that’s Killer Companies.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr
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