Facebook stock – 12/1

Facebook has one of the most exciting company stories on the planet and for this I have it on my watchlist of stocks. Shares (FB) closed at $31.72 on Friday, a new 6 month high.

The Facebook initial public offering (IPO) took place last year. It was one of the most hyped-up and at the same time worst IPOs in history. The stock traded higher than its IPO price for one single day, before gradually losing 60% of its value within a few months.

Market participants embraced the stock again, after FB reported better than expected earnings and nice mobile advertisement revenues.

FB allows retailers to use targeted advertisements based on users’ interests. The mobile division of Samsung stated that the revenue it generated from FB advertisements was 13 times higher than the money it spent to FB for display of these advertisements. This is a huge return on advertising expenses and it is likely that an increasing number of companies will use FB to display their Internet advertisements, thus making FB a serious threat to Google and others.

Among other things, FB recently introduced an application which allows users to buy physical gifts for each other through it. The social network is estimated to take 12% of the revenues from those purchases and many expect this line of revenue to grow in importance in the near future.

Petros