Facebook's stock price is up again this week after announcing features that mimic those of Snapchat.
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BARCLAYS: Facebook is the stock to own for the 'golden age' of mobile (FB, GOOGL, SNAP)
Facebook's stock price is up again this week. Barclays named Facebook the "best pure play in consumer Internet around the secular growth in mobile advertising."
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In another piece of good news, Barclays has named Facebook the "best pure play in consumer Internet around the secular growth in mobile advertising, full stop."
Analyst Ross Sandler and his team released a note on Facebook March 29 with an "Overweight" rating and a $154 price target, implying a potential 9.5% increase.
Sandler thinks that the next 3-5 years will be the "golden age" of mobile, with the rapid transition of all things moving from desktops and laptops to mobile devices.
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This shift is already well underway, especially in emerging markets where most users never had a desktop to begin with.
Barclays suggests that the next step is to fulfill Facebook CEO Mark Zuckerberg's 2016 vision, “mobile first to video first.” According to Sandler, this transition should drive up the company's unit ad prices and the amount of time users spend on Facebook.
The bank does believe that the shift to video will cannibalize some of Facebook's traditional ad space, which may result in a period of reduced margins. However, the bank is confident that the shift to video will pay off in the long run.
For now though, Barclays thinks that Facebook's Newsfeed remains its most advantageous feature, as it's responsible for 95% of all Facebook's revenue. The analysts added:
Facebook claims that there is not much room left for more ad space. While Barclays disagrees with that, the bank does agree with the social media giant that user engagement and growth is more important than increasing revenue at this time.
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Barclays recognizes that there is a ceiling to Facebook's mobile advertising success:
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