) has unveiled Graph Search, a tool that will enable Facebook
users to search for information within the website. Currently,
the service is in beta testing mode and is only available to a
limited number of Facebook users.
Facebook said that Graph Search will search for a specific
query among contents that are shared by users and are publicly
available within the social network platform.
Moreover, the search results can be customized according to
specific time frames, locations or other information that are
available on users' profiles. This feature is also expected to be
available for mobile users.
Facebook has plans to launch Graph Search as a full fledged
service. To make it more effective, the company will also be
) Bing search engine to deliver additional search results when
Graph Search is unable to find relevant answers.
Facebook's move to develop its own search tool makes sense as
it has in excess of 1 billion users. Thus, the company has the
opportunity to use this user base to increase its advertising
Moreover, this is expected to increase user engagement;
thereby increasing traffic on its site. The new search tool is
also expected to bring in more advertisers to the social network
platform and boost Facebook's advertisement revenue.
We believe that Facebook has significant growth opportunities
from increasing online advertising spending as compared to
traditional formats. Facebook's massive user base and its ability
to track personal details over time make it a formidable force in
the online ad market. Facebook can use this massive database to
help advertisers target relevant ads going forward.
However, increasing competition from
) in the online ad market and lack of visibility around mobile
monetization are the concerns.
Although Facebook has made a number of acquisitions to enhance
its mobile offerings, we believe that lack of adequate ad
coverage for the mobile platform will continue to hurt its
revenue going forward. Moreover, continued investments to expand
mobile offerings are expected to hurt margins in the near
Currently Facebook has a Zacks Rank #2 (Buy).
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