Everyone enjoys perusing their newsfeed to read their friend’s latest joke or to see their sibling’s newest photo. Soon Facebook Inc (NASDAQ:FB) will be used to watch the most recent video advertisement. That’s right ladies and gentlemen, Facebook Inc (NASDAQ:FB) is ready to go head-to-head with Youtube by incorporating their own video advertisements right on your newsfeed. This new marketing plan could bring in between $1 million and $2.5 million per day and analysts are giddy about this new cash flow. Thus, recommending to BUY FB.
Facebook videos: how it will benefit the stock
Top analyst Victor Anthony recommends BUY Facebook Inc (NASDAQ:FB), noting that the stock could be worth $900 million annually. “Taking this down to the valuation level, video ads could be worth up to approximately $3 per Facebook share.” Anthony also points out that Facebook might be able to solve the issue of proving return on investment to large brands, “Facebook’s efforts to link the Custom Audience ad unit to businesses CRM systems will help with measurement, and will help show that users who viewed an ad eventually made an in-store purchase.” Victor is ranked 22 out of 2315 analysts and has a 6.3% average return over S&P-500.
Susquehanna analyst Brian Nowak also recommends BUY FB and agrees with Victor that this brings Facebook a lot of growth potential, “FB’s decision to not significantly increase the number of sponsored stories as a percentage of newsfeed is a positive long-term move as restricting supply growth in an auction pricing model, combined with improving ad quality and conversion (which FB is focused on) is likely to lead to even faster ad dollar growth.” Facebook Inc (NASDAQ:FB) is also making it easier for customers to buy ads, “Facebook’s ‘objective-based’ buying is also resonating well with advertisers heading into 2014 as the company’s large audience, combined with a simple suite of ad units is causing advertisers to spend more and consolidate their digital spending.”
Facebook going right
Brian also notes that Facebook Inc (NASDAQ:FB) is already moving in the right direction with its success from mobile advertisements. “Facebook’s mobile leadership (507mn global daily active mobile users as of 3Q:13) is also continuing to help the company capture a larger share of budgets as eyeballs are moving to mobile and advertisers are itching for ways to spend.” Brian also adds that, “advertisers also like the familiarity of the Facebook mobile ad units, as the sponsored story ad units are directly transferrable from desktop to mobile.” Brian is ranked 1459 out of 2315 analysts and has a 57% success rate of recommended stocks.
Whether you are looking forward to watching ads on your newsfeed (or not), these analysts think this business move will do wonders for Facebook’s stock. To continue following these recommendations, as well as other analyst recommendations, download TipRanks today!