GM just gave Facebook’s mobile strategy a big wet kiss

Late last year, Facebook took a big reputational hit when General Motors (GM) pulled its ads off the social network site after concluding they weren’t so effective. Well, GM is back – this time to run Chevrolet car ads on the mobile version of Facebook.

The return campaign from a major corporate sponsor should provide a boost in confidence for Facebook’s mobile offering. Mark Zuckerberg’s quest to open up new revenue-generating businesses like video ads, music streaming, search and, most recently, mobile phones, are still unproven.

But Facebook’s core desktop and mobile ad revenue outlook appears robust. Facebook’s total revenue is expected to advance 30% to $6.53 billion in 2013, according to Bloomberg. Analysts quoted in the Bloomberg story also see mobile ad revenue hitting $339 million for 2012 and then reaching $1.2 billion by 2014. Facebook users are also spending more time accessing the site on iPhones and Android smartphones.

Facebook Mobile

As a result, Facebook shares, which touched a 52-week low of $17.55 back in September amid heavy short interest, has rebounded smartly and is outperforming other social network investment plays such as Groupon (GRPN) and Zynga (ZNGA).

That’s quite a shift in sentiment. Back in September, Facebook shares touched a 52-week low of $17.55 and short interest in the company soared. The shorts have since moved on to other social media names like Groupon (GRPN) and Zynga (ZNGA).

FB Chart

FB data by YCharts

Meanwhile, Facebook’s $1 billion purchase of Instagram is starting to look like a winner, according to Lauren Indvik. While some worried Instagram would lose its innovative energy as part of Facebook, Indvik says that hasn’t been anywhere near the case:

Working from Facebook’s offices, Instagram continued to roll out new features over the past year, introducing a feed and profiles for the web, photo maps and a tool called Lux for balancing exposure and adjusting brightness. It also rolled out new filters (Mayfair, Willow and Sierra), an improved camera and tilt shift, and translations for 25 languages. Its following quadrupled to more than 100 million monthly active users, thanks in part to Instagram’s expansion to Android just days before Facebook agreed to acquire it.

As for Facebook’s jump into smartphones (via the HTC First), John Constine at Techcrunch has pulled together this useful compilation of reviews. Plus side: smart design, efficient messaging, reliable battery, and excellent feed-reading experience that should keep users engaged and build out Facebook’s mobile presence. Negatives: camera fails in low light.

But not all the news is good at Facebook. A new study by Piper Jaffray shows declining interest in Facebook among teens compared to rival sites such as Twitter.


Photo: Omar Eduardo

The investments discussed are held in client accounts as of March 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.