This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Facebook Graph Search: First Impressions (Update 1)

Additional analyst comment has been added to this story.

SAN FRANCISCO ( TheStreet) - Facebook (FB - Get Report) announced its Graph Search technology at a closely-watched press event this week, and while Wall Street didn't react favorably to the announcement, I believe investors are missing the forest for the trees.

CEO Mark Zuckerberg and Facebook executives Tom Stocky and Lars Rasmussen, both formerly of Google (GOOG - Get Report), announced the new product designed to help users find more about their friends, what they like, and where they've been, in order to make their own lives easier. While Zuckerberg stressed this product is in beta right now (it's only rolling out to hundreds or thousands immediately and is not available on mobile yet), it's clear that Graph Search has great potential.

As users continue to tag photos, 'like' pages, and import data to their Facebook pages, Graph Search will get smarter and its recommendations better. Zuckerberg stressed that Graph Search is not the traditional web search done by Google, Facebook partner Microsoft (MSFT - Get Report) and others, but much more. "Graph search is really powerful," he said, during his presentation. "This is really neat stuff. It's one of the coolest things we've done in a while."

JP Morgan analyst Doug Anmuth believes that this will hit Google, as more results eventually show up in Graph Search, and not on Google. "Google's stated mission is to organize the world's information and make it universally accessible and useful," he wrote, in a research note. "However, as Facebook's mapping of the social graph rapidly expands, more and more of that information will reside on Facebook and be included in Graph Search, not Google's search results."

Anmuth notes that Graph Search is not a replacement for Web search, but may be more useful, and, given the limited scope of the project now, may eventually become extremely useful. "Graph Search may not have the near-term revenue impact of some other initiatives that the Street was looking for in Tuesday's announcement, but we think it makes Facebook's data far more useful by giving it greater shelf life and surface-ability, which should deepen engagement on the site," he wrote.

The analyst rates Facebook "overweight" with a $35 price target.

Right now, Graph Search mainly focuses on photos, places, people and useful things as its four major pillars, but there's more to come, according to Zuckerberg.

Graph Search works by indexing users' connections. If you or your friends don't want something to be searchable, however, privacy settings on your account can keep those embarrassing photos hidden. Most of the information, at least initially, seems as if it will come from a user's friends, but there's also a way to search across people who aren't your friends to provide the most useful answer. Advertisers will eventually eat this up, helping generate a new revenue stream for Facebook.

"This could be a business over time," Zuckerberg said, but noted that the social network first needs to turn Graph Search into exactly what people want.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FB $118.10 0.57%
GOOG $699.20 0.99%
MSFT $49.96 0.36%
YELP $21.78 -1.70%
AAPL $94.32 -0.90%


Chart of I:DJI
DOW 17,651.09 -99.82 -0.56%
S&P 500 2,049.79 -13.58 -0.66%
NASDAQ 4,726.5910 -36.6330 -0.77%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs