Facebook (FB) Stock Sliding, Paying Internet Stars to Live-Stream

Facebook (FB) is paying Internet stars to use the company’s new Facebook Live streaming service.
By Rachel Aldrich ,

NEW YORK (TheStreet) -- Shares of Facebook (FB) - Get Report  are dipping 0.29% to $199.02 in pre-market trade as the company pays Internet celebrities to use its new Facebook live streaming service, the Wall Street Journal reports.

The Menlo Park, CA-based communications giant unveiled the service last summer, but only for use by celebrities and public figures. In January 2016 the company opened live stream to all Facebook users.

Facebook hopes that by paying nearly 140 media companies and celebrities - including Olympic swimmer Michael Phelps, "Star Trek" actor George Takei, Buzzfeed and the New York Times - over $50 million in total to create live videos for stream, the service will catch on, the Wall Street Journal reports.

Nearly 15% of the recipients are Internet celebrities of Alphabet's (GOOGL) Youtube or Twitter's (TWTR) Vine fame. These users are receiving roughly $2.2 million of the $50 million total being paid out.

The company asks that they use the streaming service at least five times a month through September.

(Facebook is held in Jim Cramer's charitable trust Action Alerts PLUS. See all of his holdings with a free trial.)

Separately, TheStreet Ratings rated this stock as a "buy" with a ratings score of B+.

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, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins.

TheStreet Ratings feels its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate FACEBOOK INC as a Buy with a ratings score of B+. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • FB's very impressive revenue growth greatly exceeded the industry average of 20.6%. Since the same quarter one year prior, revenues leaped by 51.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • FB has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 12.70, which clearly demonstrates the ability to cover short-term cash needs.
  • FACEBOOK INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FACEBOOK INC increased its bottom line by earning $1.28 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($3.61 versus $1.28).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 194.9% when compared to the same quarter one year prior, rising from $512.00 million to $1,510.00 million.
  • The gross profit margin for FACEBOOK INC is currently very high, coming in at 94.69%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.05% is above that of the industry average.
  • You can view the full analysis from the report here: FB
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