Facebook Inc. (NASDAQ:FB) has three primary catalysts in the form of: adding more video ad products to the platform, turning on advertising in Instagram, and leveraging the 88-100 million users on the platform during U.S. prime time TV hours through social TV ad products, according to BMO Capital Markets analysts Daniel Salmon and Ygal Arounian.
Owing to theses catalysts, analysts have assigned the “outperform” rating on Facebook and have raised the price target to $50.
Here’s a round up of hedge funds’ May returns
Tyro Absolute Return Fund was down 1.5% for May. The fund's main contributors in May were Super Micro Computer, which gained 1.6%, Shyft Group, which was up 1%, and GCI Liberty, which gained 1%. Detractors in May include Recro Pharma, which fell 2.6%, index shorts and hedges, which declined 2%, and DXC Technology, which was Read More
Video ads delayed, but not a concern
Video ads from Facebook Inc. (NASDAQ:FB) have been delayed, but analysts feel that it’s not a big concern. BMO capital Market has dropped its assumption of $35 million in additional video ad revenue in the fourth quarter and expects that it will be counterbalanced by the improved monetization of current ad products. Further, the analysts maintain that the prime period for the video advertising opportunities on Facebook will be the next spring TV advertising season. As has been the trend, video ad sellers like Google Inc (NASDAQ:GOOG)’s You Tube, Yahoo, and AOL gear up their presence during the spring season, and Facebook needs to follow this trend strategically. There is an increased demand for video advertising on the platform, and Facebook offers the promoted video post ad product, which will surely help the social networker.
Facebook not rushing with ad products on Instagram
Mark Zuckerberg’s statement in the second quarter about launching ad products to Instagram captured analyst’s attention. Facebook Inc. (NASDAQ:FB) has not set any timeline for the launch but is currently focusing on user growth, which is the apt strategy. Instagram published on its blog that it has crossed 150 million users, which is an increase over 130 million users in June, indicating a strong consumer growth. Facebook is making the right decision by not pushing video ads on Instagram, believe the analysts.
Facebook to bring more TV-related products
Approximately 88 to 100 million users log in to Facebook during the prime time TV hours of 8p.m.-11p.m., according to Facebook’s data. Since most networks and shows have a Facebook page, users connect with the show pages and the celebrity they love over Facebook. The social networking giant has come up with a number of social TV-related products, including TV listings on its mobile app.
Facebook Inc. (NASDAQ:FB) is expected to bring in more TV-related activity on the site, but it is also working on ad product development. Twitter is also in the process of increasing network partnership for its Amplify products in particular, according to analysts.