Facebook (FB) Stock Gaining on New Photo App Using Artifical Intelligence

NEW YORK (TheStreet) -- Shares of Facebook (FB) are gaining 0.45% to $81.07 on Tuesday after the company launched 'Moments,' a new photo app that uses artificial intelligence, allowing users to privately share photos with friends.

The company said that the app was created because many times people who attend the same events want to share or send photos to each other however, sending numerous photos to multiple people can be a hassle.

To make this process easier, 'Moments' uses facial technology to identify which friends are in the pictures, and enables you to privately sync the photos quickly with specific friends.

Separately, Belgium's data-protection watchdog is accusing the social media firm of tracking its users on external websites through the use of 'like' and 'share' buttons, and even monitoring the activities of non-Facebook users by means of plug-ins or cookies, The Wall Street Journal reported.

At the same time, EU member states yesterday approved a draft of new privacy law that would boost the same national regulators' powers over companies like Facebook.

The draft law includes a one-stop shopping provision, which allowing any company to deal with only one of the EU's national privacy regulators--the one where it has its headquarters. Additionally, the new law would place limits to the use of 'profiling'--the automated process of personal data to assess performance at work, economic situation, health or personal preference, the Journal said.

Separately, TheStreet Ratings team rates FACEBOOK INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate FACEBOOK INC (FB) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, expanding profit margins, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

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

  • The revenue growth greatly exceeded the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 41.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • FB's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.97, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for FACEBOOK INC is currently very high, coming in at 94.44%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 14.45% trails the industry average.
  • Net operating cash flow has increased to $1,700.00 million or 32.29% when compared to the same quarter last year. Despite an increase in cash flow, FACEBOOK INC's average is still marginally south of the industry average growth rate of 41.44%.
  • FACEBOOK INC's earnings per share declined by 28.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FACEBOOK INC increased its bottom line by earning $1.10 versus $0.59 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.10).
  • You can view the full analysis from the report here: FB Ratings Report

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