This Could Be Huge for Facebook Stock
The tech sector can be volatile for many companies, but not for the social network giant Facebook, Inc. (NASDAQ:FB). The company has 1.55 billion monthly active users (MAUs) and is still growing at a double-digit pace year-over-year. That could be why Facebook’s stock price has been climbing for some time now. Moreover, with drones, virtual reality (VR), and an e-commerce platform coming soon, the FB stock price could get another big push.
Could This Be the Next Big Thing for FB Stock?
In a day and age when everyone spends a significant amount of time on their mobile devices, capturing mobile users is crucial for Internet companies. Fortunately, Facebook has been quite successful at doing that. In the third quarter of 2015, the social media giant grew its mobile MAUs by 23% year-over-year, hitting 1.39 billion. (Source: “Facebook Reports Third Quarter 2015 Results,” Facebook, Inc., last accessed November 23, 2015.)
Facebook also managed to monetize the growth of its mobile users. In the third quarter of 2014, mobile advertising revenue accounted for approximately 66% of advertising revenue. One year later, mobile advertising revenue represented around 78% of advertising revenue.
While having solid growth in its core business, Facebook is also coming up with interesting things that could whet investors’ appetites. In July, the company announced that it had finished construction of “Aquila,” a full-scale drone that can deliver wireless Internet via lasers. In line with its mission to “connect everybody in the world,” Facebook plans to use the drone to provide Internet access to remote areas of the globe.
Also, let’s not forget that Facebook bought virtual reality startup Oculus VR for $2.0 billion last year. This September, it was reported that Facebook was working on a stand-alone video app that would support 360-degree videos through the “Oculus Rift” VR headset. The app, while still in its early stages of development, is rumored to work on multiple platforms, including Apple Inc.’s “iOS” and Alphabet Inc’s “Android.” Note that Facebook’s CEO Mark Zuckerberg has said that virtual reality would be “the obvious next big thing.” (Source: “Facebook Looks to Bring Virtual Reality to Mobile Devices,” The Wall Street Journal, September 13, 2015.)
Hedge funds have noticed the great potential of Facebook. In the third quarter of 2015, billionaire hedge fund manager Stanley Druckenmiller increased his stake in FB by 119% to 4.09 million shares, valued at a total $377.99 million. (Source: “Form 13F,” United States Securities and Exchange Commission, last accessed November 23, 2015.)
Other than drones and virtual reality, there is something else that would make Facebook even bigger: e-commerce. This October, a number of Facebook users spotted a new “Local Market” feature in their Facebook “iPhone” app. The feature, despite only appearing briefly, is essentially an e-commerce platform powered by “Facebook Groups.” There were a number of product categories, such as books, appliances, clothing, and furniture, among others.
Facebook has confirmed the test of its Local Market feature, with a spokesperson saying, “We are in the very early stages of testing new ways for more people to easily discover, buy, and sell items with other people on Facebook.” (Source: “Facebook Tests ‘Local Market’, a Dedicated Buying and Selling Community Powered by Facebook Groups,” TechCrunch, October 29, 2015.)
The Bottom Line on FB Stock
Right now, Facebook’s investors should be quite happy: year-to-date, Facebook’s stock price climbed an impressive 37.1%, up from $78.02 to $106.95 per share. The positive news is that the upward trend in FB stock could very likely continue on, because in today’s stock market, few companies manage to grow at such a steady and consistent pace.