) recently leased space in Beijing as the company is preparing to
open an office in China. This marks the company's formal entry into
the country. However, Facebook's website still remains blocked in
China. No other details of the deal were revealed.
In May 2014, Facebook had entered into a three-year contract by
which it had agreed to lease more than 800 square meters of office
space in Beijing's Fortune Financial Center.
Earlier in 2009, Facebook's website was blocked by the Chinese
Government. However, in Sep 2013, this ban was partially lifted
with the government allowing Facebook ,
The New York Times
) to operate within the boundaries of the newly-developed Shanghai
Free Trade Zone.
However, the operations of Facebook, Twitter and any other social
media company, which enters the free trade zone, will be restricted
to a very small area with a population of only 5 million. We
believe that this restriction will act as a major headwind for
companies such as Facebook, as it will not be able to attract new
subscribers and advertisers.
Facebook's leasing of office space in China is an endeavor on its
part to extend its foothold in the Asian market and thereby boost
revenues there. In the last quarter, Facebook had generated about
14.0% of net revenue ($354.0 million) from Asia itself.
We believe that this move will enable Facebook to tap the
unexplored tech-savvy population of China, which in turn will
increase its user base. Facebook's move seems to be in total
contrast to its rival
) decision to quit China in totality after it refused to abide by
the Chinese rules applicable for search engines.
We believe that the unpredictable approach of the Chinese
authorities toward foreign Internet service providers and social
media companies is a major concern. Although the free trade zone is
a positive move, it will be preposterous to think that the Chinese
government will follow a liberal policy toward social-networking
activities, which have been otherwise blamed for instigating
anti-government feelings among the general public.
Currently, Facebook has a Zacks Rank # 3 (Hold).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
NY TIMES A (NYT): Free Stock Analysis Report
FACEBOOK INC-A (FB): Free Stock Analysis Report
TWITTER INC (TWTR): Free Stock Analysis Report
GOOGLE INC-CL A (GOOGL): Free Stock Analysis
To read this article on Zacks.com click here.