Facebook Inc (FB) Tests ”Save for Later” Option

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Reportedly, Facebook (FB) is testing a feature that will allow its users to save shared links for later reading. The feature is much similar to what applications like Instapaper and Pocket offer.

The feature is not new to Facebook as the company had tested this option last year for both mobile and desktop. However, instead of saving, the feature was used to archive status updates.

Although there is no official confirmation on its launch in the near future (Facebook is known for experimenting with several new things, which ultimately are not made live), we believe that the addition of this new feature will further boost user engagement.

Facebook’s stupendous growth in the recent times has been primarily driven by its improving focus on user engagement and mobile monetization. In the recently concluded third quarter, mobile comprised 49.0% of ad revenues, up from 41.0% in the previous quarter.

The sequential increase in mobile ad revenues was driven by an increase in average price per mobile ad, number of mobile users and ads shown per mobile user. Mobile monthly active users (MAUs) surged 45.0% year over year to 874 million.

However, management stated their concern on Facebook usage among teenagers, which was almost stable in the third quarter on a sequential basis. This prompted Facebook to allow users in the age group of 13 to 17 to make public posts. The company also announced that it will restrict ad quantity in newsfeed in order to improve user engagement.

Facebook recently expanded its “contact via phone number” feature to the messenger for Apple’s (AAPL)iOS, which was already available for Google’s (GOOG) Android users. The expansion of the feature, which allows Facebook users to message non-friends via phone number, will help the company to compete more effectively with WeChat and KakaoTalk.

We believe that new products such as the Reader and television-like spot offerings for advertisers (reportedly for $2.5 million a day) are expected to drive top-line growth going forward. Additionally, improving customer engagement will help it to aggressively compete in the ad market against the likes of LinkedIn (LNKD).

We believe that the company has gained significant traction in its mobile ad business within a very short span of time. This combined with its massive user base and its ability to track personal details over time makes it a formidable force in the online ad market.

However, a volatile macroeconomic environment, higher investments to expand mobile offerings and increasing competition are expected to hurt margins in the near term.

Currently, Facebook has a Zacks Rank #2 (Buy).

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