Has Facebook finally grown up?
The company has moved past its growing pains and may now be the fastest-growing contender for mobile advertising dollars.
By Jim Probasco
Cowen & Co. upgraded Facebook (FB) from "market perform" to "outperform" Sept. 20, raising its price target on the stock from $29 to $53. The company has now moved past its awkward phase into corporate adulthood, according to Yahoo Finance.
Citigroup's Mark May upgraded the stock from "neutral" to "buy" Tuesday, citing conversations with advertisers and agencies and a belief that factors driving second-quarter growth were sustainable.
Part of the reason is reflected in the way society has changed. Facebook generated more than 41% of its advertising revenue from mobile last quarter. The question is how much and how fast will this revenue stream grow?
According to eMarketer, Facebook will grow 10% year-over-year in global ad revenue. Google will grow just 1%. As eMarketer pointed out, the thing that terrifies Google is the fact that Facebook just began offering mobile ads last year.
To add even more fuel to the fire, Google’s mobile ad revenue grew by 14% between 2011 and 2012. A 13% drop in growth is startling to say the least.
Now Facebook wants to add a new wrinkle: autofill. TechCrunch reported that the company plans to collaborate with PayPal, Stripe and Braintree to allow Facebook members to make in-app purchases using credit card information stored in their Facebook account. The process avoids the need to type in numbers and data on a tiny smartphone or device screen.
Facebook won’t get the processing fee. What it will get is information. It will know which retailers its members buy from, what they buy and how much they spend. This would give Facebook tremendous leverage when selling mobile advertising since it can tell potential advertisers how much its members are willing to spend on their products, according to TechCrunch.
"Facebook hasn’t begun to realize the potential of mobile advertising," said Todd Schoenberger of LandColt Capital, according to Yahoo Finance.
At the time of this writing, Jim Probasco had no position in any mentioned securities.
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Lifting a page from its smaller rival's playbook, Facebook is adjusting its algorithms to prioritize posts about live TV, sports and other timely, trending topics.
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