Advertisements: Annoying but Very Profitable

Facebook (FB) proved just that with its surprising Q2 earnings release, and it’s all thanks to the one thing most people find annoying and wish would just go away. Yes, the almighty advertisement. Images and videos that make you buy things you didn’t even know you needed. To everyday Americans, ads are more of a nuisance than anything else. But for businesses that put them up there--and they pay a pretty penny to do so--they are the bread and butter of their existence.

Facebook is a perfect advertising machine that can precisely point out a potential customer to any business. Guess what happens when you like or share something on Facebook? You tell everyone what you’re interested in (including Facebook’s Audience Insights database), and now businesses can tailor their ads just for you.

Based on Facebook’s investment rating history, the company has been on the upswing since July, 2015 when it became a BUY stock, rising to be one of the top rated companies with an A investment rating on July 28, 2016.

Wednesday’s Q2 earnings announcement that topped analyst estimates, increased Facebook’s value by 1.7 percent, trading at $123.94 by the end of the business week. The company added another quarter to its already solid list of increasingly profitable quarters.

It appears Facebook is well beyond the reach of its competitors. Twitter (TWTR), a D rated company whose stock we have mostly rated as a SELL since the beginning of 2014, reported another disappointing quarter. LinkedIn (LNKD), another SELL rated competitor that has accepted an all cash bid of over $26 billion from Microsoft, is expected to release its Q2 earnings later this week.

Facebook is already massive, and yet still increasing, user base, may allow the company to further capitalize on dissecting the market and providing vital advertisement data to other businesses.

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