Sunday, July 21, 2024

Facebook is now 6th most valuable in S&P 500

SAN FRANCISCO — Wall Street is running out of superlatives for Facebook.

"Ace Book." "Moving beyond the friend zone." Those were two of the research notes published by slack-jawed analysts following Wednesday's Street-beating quarterly results that solidified its position as one of the world's most powerful and top-performing technology companies.

Facebook far exceeded expectations for nearly every metric, even as other tech companies disappointed, sending shares soaring 11% to an all-time high of $120.79 and giving the company a $30 billion bump to its market cap.

Facebook is now the sixth most valuable company by market cap in the S&P 500, overtaking Johnson & Johnson.

Of the 49 analysts covering the stock, 45 rate it a "buy" or higher.

Fueling the positive sentiment: Facebook's winning streak in mobile advertising and the rise of video advertising. Facebook has been showing its 1.65 billion users videos that play automatically and it has introduced more advertising on photo-sharing service Instagram.

First-quarter results illustrated the traction Facebook is gaining with advertisers.

Facebook grew revenue 52% to $5.382 billion in the first quarter, topping the $5.25 billion analysts polled by S&P Global Market Intelligence expected. Eighty-two percent of advertising revenue in the first quarter came from mobile.

Facebook is expected to account for about 12% of the $186.81 billion global digital advertising market in 2016, according to research firm eMarketer.

Pivotal Research estimates Facebook will capture 47% of global digital advertising growth and 43% of all advertising growth outside of China in 2016.

"Facebook continues to generate very high and very profitable growth. An extremely rare combination. And we see in Facebook plenty of strong, secular platform growth ahead," RBC Capital analyst Mark Mahaney wrote in a research report.

With more than 1.6 billion monthly active users and more than 1 billion daily active users as well as three million advertisers, Facebook has an "insurmountable competitive edge," says Wedbush Securities analyst Michael Pachter.

"We expect Facebook to continue its rapid growth overseas, and expect it to successfully monetize its under-penetrated Instagram, WhatsApp and Messenger assets over the coming years. Investments in new initiatives position the company for long term growth, and we believe that these initiatives will drive growth over the next decade," he wrote in a research note. "In summary, Facebook is a great company, period."

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Author: Red

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