A New Mobile Ad Network Should Boost Facebook Inc. Stock

The social network takes a swipe at competitors while cashing in on its data collection efforts. Facebook Inc. stock should respond well to the move.

Apr 29, 2014 at 4:32PM

Surprisingly, rumors of the company building its own mobile ad network haven't done much to boost Facebook Inc. (NASDAQ:FB) stock. Fool contributor Tim Beyers says the downturn isn't likely to last.

Pinpointing the issue isn't easy. Ahead of this week's F8 developer conference in San Francisco -- where the new mobile ad network is to be unveiled -- Facebook announced strong first-quarter results. Revenue soared 72% while per-share earnings tripled. Mobile deserves the lion's share of credit for those gains.

Specifically, Facebook served 1.01 billion mobile users in Q1, up 34% year over year. Roughly 1.28 billion logged in overall, a 15% increase. To capitalize on that growth, Facebook now wants its own mobile ad network to compete directly with Google (NASDAQ:GOOGL)(NASDAQ:GOOG).

In the video, Tim says Facebook is also cashing in on data acquired over years of helping users log in to mobile apps. Thus, advertisers who tap into its mobile ad network will also be accessing a rich tapestry of information for discovering which apps -- and which devices -- might be best to target.

The losers here? Certainly Google, which eMarketer says grabs about 50% of the mobile ad spend. Yet Tim says Twitter (NYSE:TWTR) and Yahoo! (NASDAQ:YHOO) could also take a hit, since both are putting resources into converting more revenue from mobile content.

Now it's your turn to weigh in. How do you expect the new mobile ad network to impact Facebook stock? Please watch the video to get the full story, and then leave a comment to let us know your take, including whether you would buy, sell, or short Facebook stock at current prices.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google (A and C class) at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Facebook, Google (A and C shares), Twitter, and Yahoo!. The Motley Fool owns shares of Facebook, Google (A and C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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