Facebook is worth the risk

Mark Zuckerberg proves the naysayers wrong.

By Jonathan Berr Sep 13, 2013 10:27AM
After Facebook (FB) shares hit an all-time high earlier this week, investors might wonder if they were too late to cash in on the explosive growth Wall Street expects from the pioneering social network.

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 CEO Mark Zuckerberg during a press event in Menlo Park, Calif., on April 4, 2013 (© Robert Galbraith/AP)Though some might argue that growth in mobile is over-hyped, there is plenty of evidence to the contrary. For instance, comScore estimates that there were an astounding 4.7 billion U.S. mobile commerce sales in the second quarter and spending on these transactions could top $25 billion during the December holidays. Innovations such as the fingerprint security device on the new iPhone 5s are expected to encourage even more people to make mobile purchases.

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
Tags: FB
21Comments
Sep 13, 2013 11:42AM
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BS!  This is a total con in promotion.  The PE ratio tells you that, period.  It says that Facebook is feeding off our welfare nation and Zuckerberg has nothing to do with this.  He is "being" financed and the stock is being forced up by "them". It will all come out in time.  So, what is new with the BS that continues with "insiders"......nothing.  Social medias are becoming more and more of a "joke" every day.  Do not waste your time..... let alone the money that we all do not have to "invest" in this scam.

 

Sep 13, 2013 12:07PM
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FACEBOOK a killer company YES it sure will be.A POCKET BOOK killer that is no way in hell would i ever buy something from an advertiser on facebook.I use firefox and most of the pop up ads i get on fb are companies i already buy from.NOT some off the wall crap fb prompted me to try with there advertising.MOST people are not spending enough time on fb to warrant REAL advertising when all you do is check in and out of fb a couple times a day for 2 minutes i'm not going to buy something i saw advertised there.BIG companies with there tracking software will soon see that it's there regular customers that keep buying and not new customers they picked up from some fb ad.when that happens fb is screwed cause the only way they are ever going to make any money is with advertising.PLUS soon somebody else will come up with the next great media social thing.
Sep 13, 2013 11:44AM
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The more Facebook tries to make money, the more it is going to irritate subscribers.  You have Twitter coming out.  How many of these social networks can be sustained?  What is the current PE of FB (200 X earnings or something like that)?   This company is not Apple  or Google. 

Sep 13, 2013 11:41AM
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Just like the dot com days - you don't make something I don't buy your stock.
Sep 13, 2013 12:15PM
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Q. When will people realize the revenue stream is all advertising money?

 

A. When the advertising people figure out it doesn't pay.

Sep 13, 2013 12:21PM
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I'm one of those people who likes to read between the lines.

 

Thanks for the SELL tip.

Sep 13, 2013 12:51PM
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WHY should I WANT to buy into this IDIOTIC company?  From what I hear, EVERY TIME you turn around, YOUR privacy setting have been RESET BY THE COMPANY.  WTF IS THIS???  HELLO? And let's NOT ignore the fact of WHOLE families going onto face book bragging about going on a 3-week vacation. You IDIOTS might as well  have said to ALL the thieves in you neighborhood "We're gone, now.  Come over and steal everything we have!"

 

The cyber bullying???  THE PEDOPHILES trolling on this site???

 

Do I have to say any more?

Sep 13, 2013 12:32PM
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who paid you guys to publish this?
Sep 13, 2013 12:27PM
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I Will not be buying...

I never joined facebook because I saw how much time others wasted on it..

Second reason is because they cant be trusted.. by what Ive read and seen..?

Sep 13, 2013 11:34AM
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Has anyone else noticed that whenever a MSN article comes out recommending a stock it's down for the day?
Sep 13, 2013 1:48PM
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manic mark and company have propped up the stock to suck more people into the vacuum. never fails to amaze me how many people swallow this jit. 
this guy has surrounded himself with masters of hype. kind of hard to sell advertising on a site people are leaving like a town with the plague.
Sep 13, 2013 11:42AM
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It's massive overkill to behave as if Zuckerburg is the burning force behind current innovations that come out of Facebook. He did the easy part, be part of a startup that some might say wasn't even his idea. Regardless, now the true tests begin, quarter over quarter results.
Sep 13, 2013 1:29PM
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Another "get out with $" loser. The system is useless as a tool for anything except for kids talking with kids. The fad will fade very soon like it's precursers. As a penny stock, maybe, you would not lose too badly. No product here.
Sep 16, 2013 2:06PM
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I would suggest a summer rental of this stock. It will go bust on a "Hindenburg" scale!
Sep 13, 2013 9:41PM
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Smeado,

 

So true, In fact so true, that if my friends find out that they have ANY stock in their portfolios that MSN likes or recommends, THEY SELL IT IMMEDIATELY.  So Far they MADE more than they've LOST.

Sep 13, 2013 3:34PM
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Lemme see....??

I don't use Facebook..

My kids do sometimes..

Friends try to get me on it..

I don't own Facebook(FB) stock.

FB is up about 15-16% since IPO...

There are much better ways to spend money...

Yup, that pretty much wraps it up..

Good luck to you invested.

Sep 13, 2013 9:35PM
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Pete R

 

keep drinking your kool aid and taking your meds, you're going to be fine.

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