Facebook (FB) Stock Higher on New Mobile Format for Ads

NEW YORK (TheStreet) -- Shares of Facebook (FB) are jumping 2.69% to $87.02 on Tuesday after the social networking service unveiled a new mobile format in the works that makes advertisements more interactive and immersive, CNBC.com reports.

Facebook's Chief Product Officer Chris Cox told advertising executives at the Cannes Lions advertising festival that the company's new mobile format blends video with still images, moving images and information to engage the viewers in a whole new way, according to CNBC.com.

By creating rich media, users can seamlessly scroll through their news feeds while browsing through interactive ads.

This new format will help Facebook's growth in terms of mobile and video,, as mobile ads comprised 73% of the company's ad venue in the first quarter and video is becoming increasingly common, CNBC.com said.

Cox did not say when Facebook will make this format available to advertisers to use, but we should expect them to launch broadly by the end of the year, CNBC.com noted.

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 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

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