) recently updated its Paper app. The 1.2 update adds a special
Trending section, which highlights news and photos.
Facebook Paper is a standalone mobile app, which was initially
developed only for
) iOS to serve as a phone-based equivalent of a newspaper or
magazine. The app was released for iOS on Feb 3, 2014.
We believe that the addition of the new feature will make the app
more appealing to users. However, the app is stuck somewhere in the
middle of being an ad-free, filled with images replacement
for the News Feed and a replacement for newspaper with sections
dedicated to different news verticals.
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. Hence, keeping the aforesaid in mind,
Facebook has added certain privacy features as well. The newly
updated Paper app will enable users to limit the audience of their
posts going forward.
Per Gartner, ad market spending is expected to hit $42.0 billion in
2017. We believe that Facebook's recently adopted strategy of
targeting ads based on browsing history of users will boost
company's ad revenues in the near term.
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, Facebook's growing mobile user base (more than 1
billion), Instagram's increasing popularity (200 million users) and
the new initiatives such as Internet.org will continue to boost
Facebook's share price in the near term.
Currently, Facebook sports a Zacks Rank #2 (Buy).
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