) recently announced that it will use personal information gathered
from activities of its users elsewhere on the web to more precisely
target advertisements on the social network.
We believe the addition of the aforesaid feature will help
advertisers to determine more relevant ads. However, most U.S.
online consumers do not prefer to trade their personal data for
more relevant ads as supported by the results of a survey conducted
by Consumer Reports.
Hence, this feature has raised privacy concerns worldwide. In an
endeavor to pacify these concerns, Facebook declared that from now
onwards it would allow its users to see why certain ads pop up in
their News Feeds. This resembles
) Ads Settings page, where it details a gender, age range and list
of interests of a user based on their search history and Google
Facebook also announced its decision to provide a link to an
industry website that will allow users to not have their activities
on websites tracked, as well as a link to appropriate controls
within their smartphones to eliminate mobile app tracking.
Online companies such as Facebook have been facing increasing
scrutiny from privacy regulators over time as consumers
increasingly post information about their personal lives on the
web. Facebook settled charges with the U.S. Federal Trade
Commission in 2012, which stated that it had deceived consumers by
forcing them to share more personal information than they had
Per the settlement, Facebook is required to get user consent for
certain changes to its privacy settings and is also subject to 20
years of independent audits.
Meanwhile, after the failed attempt of purchasing Snapchat,
Facebook recently launched a new messaging feature that lets users
tap and hold the camera button to record a video straight into the
message. This feature is currently available on iOS devices and
will be available on Android devices very soon.
Per Gartner, ad market spending is expected to hit $42.0 billion in
2017. We believe that Facebook's strategy to target ads based on
browsing history of users will boost company's ad revenues in the
As Facebook's ad business matures, top-line growth is expected to
suffer. Facebook's rapid pace of acquisitions is also expected to
weigh down on profitability and cash balance in the near term.
Intensifying competition from the likes of Google,
) remains a major concern.
Nevertheless, we believe that Facebook's growing mobile user base,
Instagram's increasing popularity, frequent launch of new products
and international expansions will boost the company's top line and
profitability going forward.
Currently, Facebook has a Zacks Rank #2 (Buy).
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
YAHOO! INC (YHOO): 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.