NEW YORK (TheStreet) -- Shares of Facebook Inc.
(FB - Get Report) were up 2.11% to $61.66 in trading Thursday. The advance comes on the news that its $1 billion acquisition of Instagram in 2012 is paying dividends in the mobile market.
Independant market research firm eMarketer is reporting that Instagram usage surged 35% in 2013. eMarketer estimates that nearly 35 million Americans accessed the social media photo sharing site at least once a month in 2013, approaching Twitter (TWTR - Get Report) usage levels "particularly on smartphones and among millenials and Gen Xers."
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"By the end of this year, almost 25% of US smartphone users will snap a photo, slap on a filter and share their creations with friends on Instagram on a monthly basis (or, at least, sign in and check out what their friends are posting)," eMarkter said.They estimate that 43.2 million Americans -- 17.6% of Internet users -- used Twitter at least once a month in 2013, while Instagram users represented 16.1% of Internet users. TheStreet Ratings team rates FACEBOOK INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation: "We rate FACEBOOK INC (FB) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FB's very impressive revenue growth greatly exceeded the industry average of 16.4%. Since the same quarter one year prior, revenues leaped by 63.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although FB's debt-to-equity ratio of 0.03 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 11.46, which clearly demonstrates the ability to cover short-term cash needs.
- Powered by its strong earnings growth of 566.66% and other important driving factors, this stock has surged by 158.97% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Internet Software & Services industry and the overall market, FACEBOOK INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: FB Ratings Report