Facebook Inc (FB) is off about 4% in the past month.
But unlike other tech firms — like Apple Inc. (AAPL) for example – where selloffs have been around fears that the company has lost its innovation edge, FB is continuing to launch new applications and develop new systems that will add even more value to this social media juggernaut.
Historically, the biggest challenge for FB wasn’t growing its user base — which now sits at 1.65 billion — it was to monetize its users. And that was very challenging in the early days.
The Road to Advertising Strength for FB Stock
After changing its privacy policy around and building a potential advertising platform, advertisers were still not getting any bang for their buck. A lot of big corporations that blindly rushed in to saturate FB with advertising eventually realized that they were going to have to see something for its advertising dollars. Many cut back or pulled their advertising completely and re-evaluated their social media strategy.
In the meantime, FB kept building value into its platform. It integrated advertising and then created more dynamic experiences in its mobile platform. It also added two more social media companies, WhatsApp and Instagram, that have globalized its appeal and gave FB a proving ground for video and image-dependent social media.
And now that mobile bandwidth has increased significantly, FB is in prime position to reap the benefits from all of its innovation.
WhatsApp has 1 billion users and Instagram has 400 million. Facebook Messenger has 900 million monthly active users. These are huge audiences, especially when you consider that many of the users are on all three platforms. That means triple the advertising opportunities for a specific audience. This kind of segmentation is a marketer’s dream.
And FB is looking to further strengthen its allure to advertisers. It’s now building an upgrade to its ‘Local Awareness’ advertising so that retailers can get a clearer idea of how effective their ads really are. Because users’ locations are tracked when this app is on, FB knows if and when a user responded to an ad and walked in the store. It has also upgraded its ability to analyze ads that have led to online sales.
Again, these kinds of metrics are not available for most other types of media. This makes FB a compelling platform for online advertising.
Another interesting move FB has started is to try and migrate its users’ photo and video files to the FB platform via a new app called Moments. All pictures that are synced to Facebook now will be taken off the servers on July 7. You can either get your photos back and store them on your own device or convert to Moments.
If FB makes the conversion simple, you can expect that a large majority of users will simply convert their image files to Moments.
This means yet another massive advertising opportunity in the FB universe. You’re getting FB at a 4% discount at this point; don’t miss out.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
