Facebook (FB - Free Report) is firing on all cylinders. The social network provider’s share price closed at a record high of $58.23 on Jan 8, 2014 reflecting bullish revenue growth expectations. The stock has surged 128.5% compared with the S&P 500’s 11.2% over the last six months.
Facebook’s focus on improving monetizing efforts and user engagement has been the key growth catalyst over the last 12 months. In addition to product launches, the company continues to acquire start-ups that empower it with new technologies. Most recently, Facebook bought India-based Little Eye Labs for an undisclosed amount.
Little Eye Labs provides software that developers working with Google’s Android operating system can use to analyze mobile applications. The acquisition will help Facebook to gather data related to mobile users, which its advertising customers can use to target the right audience.
We believe that this will further boost mobile advertising revenues. In the third quarter, mobile comprised 49.0% of Facebook’s ad revenues, up from 41.0% in the previous quarter.
We note that the company has gained significant traction in its mobile ad business within a very short span of time. This, combined with its massive user base and its ability to track personal details over time, makes it a formidable force in the online ad market.
Additionally, improving customer engagement will help it to aggressively compete in the ad market against the likes of LinkedIn and Twitter (TWTR - Free Report) .
Facebook is set to release its fourth-quarter 2013 results on Jan 29, 2014. The company has posted an average surprise of 17.4% over the last four quarters. The Zacks Consensus Estimate for the fourth quarter has jumped by a penny to 21 cents over the last seven days.
Currently, Facebook has a Zacks Rank #1 (Strong Buy).