NEW YORK (TheStreet) -- Shares of Facebook (FB) were gaining 1.6% to $83.80 Monday morning following a report that the social network's video advertising platform is gaining ground on Google's (GOOGL) YouTube.
In a new study, Ampere Analysis predicts that Facebook and YouTube could start a new advertising "arms race," according to Reuters. The firm noted that the two platforms have about the same size audiences with Facebook pulling in 1.4 billion monthly active users and YouTube pulling in 1.3 billion.
Ampere noted that advertisers are turning to Facebook's pre-roll advertisements to ensure that consumers actually see their message over using the service for general brand awareness building. YouTube offers pre-roll advertisements as well as options to show ads during and after videos viewed on the service.
In a separate report, media-buying firm ZenithOptimedia said it expects Internet ad spending to surpass TV advertising in 12 key markets and represent 28% of global ad spending by 2017, according to Reuters.
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 a number of 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. 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 5.9%. 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 41.51%.
- Compared to its closing price of one year ago, FB's share price has jumped by 26.38%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- You can view the full analysis from the report here: FB Ratings Report