Facebook Inc (NASDAQ:FB) reported its first quarter earnings last week, and managed to impress the market with stable growth in revenues and earnings per share broadly in line with market expectations. A new report, from Goldman Sachs Group, Inc. (NYSE:GS), puts a price target of $40 on the company and concerns itself with the future of the company’s custom audiences feature.
The increase in revenue at the company was 39 percent over last year’s takings of $1.05 billion. Facebook Inc (NASDAQ:FB) is managing to monetize in line, and slightly above, the expectations of the analysts following its fortunes. Custom audiences is likely to boost the quality of Facebook ads, and that will increase the company’s takings.
Custom audiences will allow marketers to advertise their products to the right people on Facebook Inc (NASDAQ:FB). The move, which has been hotly anticipated by marketers using Facebook Inc (NASDAQ:FB) as an ad platform, which gives the ability to talk to the right demographic, is one of the social network’s greatest advantages, and custom audiences finally allows it to deliver.
According to the Goldman Sachs Group, Inc. (NYSE:GS) report, the custom audiences program will be an important incremental tool to drive the company’s ad dollars in the coming years. The analysts are reluctant to put a number on the incremental increase, but they are clear in their assertion that it will be a clear and consistent driver of the firm’s bottom line in the years to come.
Since the start of 2013, Facebook Inc (NASDAQ:FB) shares have risen by just over 3.5 percent. Despite the $40 price target put on the company in the Goldman Sachs Group, Inc. (NYSE:GS) report, investors still seem nervous on the company’s future. On today’s market, shares in the social networking firm fell by around 2 percent, and stood at $27.75 per share at time of writing.
Facebook Inc (NASDAQ:FB) is evolving slowly and stably, something many commentators did not think the firm could manage when it went public almost one year ago. The company has yet to truly wow investors with an earnings report, or with any key metrics, but its solid drive toward mobile monetization and improved monetization in general are indicators that the company is well managed and heading toward a bright future.
There are, however, risks. According to Goldman Sachs Group, Inc. (NYSE:GS) the macro environment, user fatigue and privacy missteps are high on the list of risks, with user fatigue almost impossible to predict.