Facebook's Next Boost Could Come From Artificial Intelligence And Virtual Reality

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Tigress Financial's Ivan Feinseth upgraded
Facebook IncFB
from Buy to Strong Buy, as Facebook's dominance over the social media space continued to widen.

Feinseth applauded Facebook's success "in its efforts and ability to monetize its user base and service offerings through increasing advertising penetration, improving ad targeting, ad formats and incorporating video."

These initiatives go hand-in-hand with continuing to drive greater shareholder value creation and increasing economic profit said the analyst.

Revenue Distribution

The Tigress analyst pointed out Facebook's strategic revenue distribution mix, "80 percent of Facebook's revenue comes from mobile advertising, a market that's expected to grow over $100 billion by the end of 2016," said Feinseth. Short-term revenue expansion will be focused on video, Instagram ads and Facebook's news feed stated the analyst.

Related Link: Tigress Upgrades Facebook To Strong Buy, Sees Bright Future For Co.

AI And VR: Long-Term Drivers

"Facebook continues to take long term views with all of its investments and acquisitions," said Feinseth. The analyst sees artificial intelligence to build a "relevant news feed" and the use of virtual reality to share experiences between users. "AI and VR will be the drivers of Facebook's future," Feinseth added.

Prior long-term strategic acquisitions and initiatives, such as Facebook's mobile platform and WhatsApp, have played out well in the past, and Feinseth expects VR and AI to do the same.

At the time of writing, Facebook was trading flat on the day, down a penny from Thursday's $114.16 open.

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