Stay Away From FB Stock
By Tom Taulli
Mark Zuckerberg really should be commended for moving Facebook into mobile. In the latest quarter, mobile represented 49% of overall advertising revenues, up from 41% in Q2. A year ago it was zilch. This major transition was enough for FB stock to stage a nice move in 2013.
Despite this, there are things for Facebook stock fans to be worried about. One is the failure to launch products that users want! A list of some of the duds include Graph Search, Poke (which was a knock-off of SnapChat) and Home (a launcher for Google [GOOG] Android). The fact is that FB is still living off of its timeline; that’s about it.
Another troubling issue is that Facebook appears to be a bore for teens. Instead, they are flocking to apps like WhatsApp, Line and yes, SnapChat. In fact, Zuck’s offer of $3 billion for SnapChat looks like an act of desperation.
Finally, as indicated on the recent quarterly call, FB is close to the limit on how many ads it can place on its platform. In other words, it could get tougher to keep up the revenue momentum, and thus keep Facebook stock climbing.
So in light of the big rally already as well as the problems with teens and ad opportunities, I’d stay away from FB stock for now.
As of this writing, no writers held a position in any of the aforementioned securities.