Buy Facebook Inc (FB) On Earnings

Customer response

Facebook is already the second largest Internet advertisement company in America, and this new direction will ensure that advertisers find it an attractive placement platform. General Motors Company (NYSE:GM) had discounted its Facebook campaign, but the automotive giant is considering Facebook marketing once again. General Motors will use the new tool to target a younger user group, according to the Wall Street Journal. Neiman Group has also started to advertise through Facebook Inc (NASDAQ:FB) once again. According to the groups’s VP of Digital Marketing, the new tools make targeted communication possible. PepsiCo, Inc. (NYSE:PEP) is another major player that is now using Facebook as one of its key marketing channels.

Industry potential

The Internet advertisement industry is one of the fastest growing in the world. According to Reuters, the U.S. Internet advertisement market grew by 15% last year to $36.6 billion. According to PWC, mobile advertisements have played a major role in growth, with revenue from mobile devices almost doubling during the last year alone. Google is the market leader right now with revenue of $16.9 billion. Facebook is emerging as a serious force in this space, having captured $2.6 billion of the $15.4 billion display ad market.

Bottom line

Facebook has a large following of more than one billion users spread across the globe. According to IDC research, approximately 2/3 of these users spend an average of approximately 30 minutes on Facebook Inc (NASDAQ:FB) every day. The recent advertisement success in the U.S. is just the tip of the iceberg, and this social giant has the potential to dominate the Internet advertisement arena in the days to come. The new tools will ensure that, along with consumers, the company is able to provide the best advertisement technology to clients. Despite this high potential, the stock is still trading way below its mean sell side target price of $33, and offers an upside of 22% at these levels. Investors have a perfect opportunity to buy this giant on earnings and enjoy the earnings beat rally.

The article Buy This Giant on Earnings originally appeared on Fool.com and is written by Mohsin Saeed.

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