Shares of social media giant, Facebook Inc. FB hit a new 52-week high of $83.00 to close at $82.75 on Mar 19, 2015. The share price surged primarily on account of the company’s efforts to strengthen its business especially in areas like mobile advertising and developments in emerging nations.
This rise in share price marked a decent one-year return of about 23.6% and a year-to-date return of about 6.1%. Average volume of shares traded over the last 30 days was around 25.5 million.
This Zacks Rank #3 (Hold) company has a market cap of $231.6 billion and a long-term expected earnings growth rate of 27.5%.
Growth Drivers
Facebook has been benefiting from its massive user base, increasing engagement levels, frequently updated mobile products and strategic acquisitions.
In February, the company unveiled its plans to provide free Internet to India through the Internet.org initiative in collaboration with Indian telecom service provider, Reliance Communications. The initiative will allow the company to tap the immense potential of India’s demographic strength. Per an eMarketer report, India has the world’s second-largest number of Facebook users (expected to reach 100 million mobile phone Facebook users in 2015). Moreover, it is expected that the number of mobile Facebook users in the country will surpass the U.S. by 2017.
Facebook has also taken a number of initiatives recently to tap the potential of the advertising industry. The company launched a separate ad manager app for iOS users and a Product Ads feature that allows retailers and marketers to efficiently showcase their product catalogs to users. Most recently, the company added a new feature to its Messenger app that allows users to transfer money in a hassle free way. Going forward, we believe that this payment system is also likely to incorporate merchant payments.
The company also acquired QuickFire and TheFind in this quarter, which is a positive. All these factors are driving Facebook’s growth.
Other Stocks to Consider
Some other stocks in the same space that can be considered include Autohome Inc. ATHM, LivePerson Inc. LPSN and United Online, Inc. UNTD. All three sport a Zacks Rank #1 (Strong Buy).
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