Market Overview

Facebook Inc. Hits Video 'Tipping Point,' May Outperform in Q3

Share:
Facebook Inc. Hits Video 'Tipping Point,' May Outperform in Q3
Related FB
Facebook Or Fakebook? Some Of Us Can't Tell The Difference
Artificial Intelligence, Machine Learning Could Threaten Apps
Oclaro Revenue Speeds Up Fiber Optic Stocks On 100G Demand (Investor's Business Daily)

Facebook Inc.'s (NASDAQ: FB) increased video advertising could push third quarter results ahead of Street views, an analyst said Thursday.

Video views on Facebook between May and July grew by 50 percent, surpassing one billion each day since June, the company said this week.

"It's hard to ignore," Citi's Mark May said in a note. "I've been noticing a lot more video ads in my news feed in the last month or two."

Since video ads fetch a significantly higher price than other forms of Facebook advertising, "there's an upside potential to Q3 estimates," May said.

Wall Street expects the social media juggernaut to post earnings of $0.40 a share on revenue of $3.11 billion. May is estimating $0.35 a share but thinks results could go higher.

This week Facebook started rolling out a new features that shows how many views certain videos have received. The action drew inevitable comparisons with Google Inc.'s (NASDAQ: GOOGL) YouTube, which counts about one billion daily views.

Yet Facebook has certain advantages. Beyoncé posted a video on Facebook and YouTube Friday and in four hours, Facebook users watched the video 2.4 million times. On YouTube, only a few thousand viewers watched during that time, according to The New York Times.

Fans shared the video with Facebook friends where as YouTube lacks a comparable mechanism, the Times said.

May cites the ALS Ice Bucket Challenge series that went viral via Facebook this summer. About 30 million Facebook users commented on the series.

"We may look back and see the Ice Bucket Challenge as the tipping point for video on social media," May said, maintaining a Buy rating and $86 Facebook target.

Facebook traded recently at $77.68, up 0.32 percent.

Latest Ratings for FB

DateFirmActionFromTo
Jan 2017Raymond JamesUpgradesOutperformStrong Buy
Jan 2017Aegis CapitalInitiates Coverage OnBuy
Nov 2016WedbushMaintainsOutperform

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: Citi Mark MayAnalyst Color Analyst Ratings Tech Best of Benzinga

 

Related Articles (FB + GOOGL)

View Comments and Join the Discussion!