Indexing Facebook Inc (NASDAQ:FB) for 2014

Indexing Facebook Inc (NASDAQ:FB) for 2014

The naysayers can say anything they like about Facebook Inc (NASDAQ:FB), the company that runs the world’s most popular social networking site and they will lose face no matter what.  In H12013 the company’s share price was as sluggish as a snail in the wake of its muffed Initial Public Offering. This of course was laced with uncertainty about the efficacy of the user-monetization strategy that the company was following.

But, Facebook turned the spotlight on mobile advertising and its fledgling advertising business proved to be the backbone that would help it stand tall through the H22013. Facebook Inc (NASDAQ:FB) went public at $38/share, touched a high of $48 on its first trading day, slithered below its offering price and languished there for over a year. Today, Facebook shares are trading in a very healthy $57 range and it definitely seems like the company is not even glancing over its shoulder any more.

Going Smarter

Momentum is what counts and figuratively, the one way to shrug off moss is to flow along with the current faster than the rest of the stones in the gushing stream of technology. And the one arena that no one can afford to give a miss is the mobile space. It’s like a Midas touch- anything that is even remotely connected to mobiles will turn to gold (well, if the cards are played smartly).

And Facebook Inc (NASDAQ:FB) knows this. It has no doubt established itself as the current-day mobile social leader. It touts that it has over 350M active users who access the site via mobile devices and FB for iPhone alone has 95M monthly-active-users. Carriers across the planet work in tandem with the company to provide the service to their discerning subscribers and even those using feature phones are able to access FB services.

The latest in line is T-mobile U.S which has recently announced that subscribers using the company’s GoSmart prepaid phone service will now have free access to FB. This covers customers who do not subscribe to Internet plans. Sure, T-Mobile gains in terms of the number of new customers it attracts, but Facebook Inc (NASDAQ:FB) gets to preen its feathers before a new audience too, doesn’t it?

More Power to Mobile

No matter how magnified the trend seems, the fact of the matter is that the transition to mobile Internet has just taken its feet off the starter blocks. Hardly 1/3rd of Americans own smartphones and in other countries, this number is much lower. Someday, these billions of mobile subscribers will have smartphones and that will be the scopious audience that Facebook Inc (NASDAQ:FB) will eventually play to.  

The imprint that the company leaves today is what will decide whether these people will make FB their chosen social tool. Very frankly, at the moment, its desktop-web version looks pretty labyrinthine and unnatural. The company will have to try harder to redesign and upgrade it.

There is some news that Facebook Inc (NASDAQ:FB) is all set to acquire Little Eye Labs, an Indian startup in a transaction that is slated to be in the $10M-$15M range. The latter’s primary product is a specialized tool that enables developers of Android Apps to analyze, measure and optimize the apps they have created, which will definitely add some value to the mobile experience.

Adopting Presto with Gusto

Apart from the advertising factor, Facebook Inc (NASDAQ:FB) is moving with great gusto into the Presto space, even as big data vendors were getting very cushy with using Hive on Hadoop. Hive was the open source tool that had been created by Facebook to query big data-sets on Hadoop. Now, Presto is the latest entrant in the Hadoop space, has been released under the open-source license and has much more punch than Hive has.  

Facebook Inc (NASDAQ:FB) has always been a heavy user of Hadoop and the file-system, that it includes is perfectly suited for various analytical tools and large data sets. The company had pioneered Hive and went onto open-sourcing it in 2008. And then it just decided to do a big hey Presto! They created this amazingly fast, scalable and flexible SQL query engine which is said to be on an average, 10 times faster than Hive. Facebook is no stranger to custom architecture and it had built Corona, which was another custom tool.

No Instant Gratification

Doing a quick replay and going back to the naysayers who are yodeling that FB’s mobile ad revenue is slowing down, not many of them have noticed that it’s the comparables that are tougher. And so, even as the company does its little jig with its auto-play video advertisements (in silent mode) on desktop and mobile News Feeds, it will feed some coal into its cavernous engine.

It is wooing users with conservative auto-play posts that have celebrities and bands, even as it reins-in all the controversial products for a later roll-out. And yes, before 2013 fades into 2014, the company managed to bag a place on the S&P 500 Index. Grabbing this much-wanted spot will help Facebook Inc (NASDAQ:FB) vaunt its prowess and vault itself into 2014 with renewed vigor.

Priti Desai  is an astute business writer who has been writing about stocks and business long enough to know that the best way to be in sync with the market is to sink oneself into its volatility and irrationality. She feels that understanding business ebbs and tides is about being able to see the flip-side. Every word she writes exemplifies her expertise and knowledge. Money is what makes the world spin while business is what adds momentum to it. Zeroing-in on an exclusive and sui-generis view is about panning the finance landscape and getting a 360° view. Connect with her on

No comments:

Post a Comment