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Facebook Inc. (FB) Gets Buy Ratings, But Needs Ad Buys

Facebook Inc. (NASDAQ:FB) may finally be hitting bottom on its stock price. Since the stock dropped below $18 a share this week, the company and its stock has received a small flurry of good news that have moved the stock higher – maybe back to a recovery? There is some caution in the midst of this, however, as one of Facebook’s own executives cited in an interview the challenges still facing the social-media company moving forward.

Facebook Inc (FB), JetBlue Airways Corporation (JBLU)

That caution is tempered by some good news of late, as Facebook Inc. (NASDAQ:FB) spiked up Wednesday morning following Tuesday night’s news that CEO Mark Zuckerberg was not selling any shares for at least a year, which had apparently eased some concerns about future lockup dates coming that would unleash millions of new shares into the market. Zuckerberg ‘s shares were locked up but were eligible to be sold by the end of this year, and he holds a controlling 57-percent stake in the company. Following that news came the report Wednesday morning that two analysts at Jefferies have instituted a “buy” rating and a $30 price target on the stock.

In the analysts’ note, they wrote, “With a potent mix of unprecedented scale, high engagement, and social + behavioral targeting, we think Facebook is must-buy media for marketers as they follow users online. … Lockup pressure looks inevitable through (December) But expansion into other business areas also looks inevitable, and at the current price investors effectively receive this optionality for free.”

But while Jefferies touts “unprecedented” scale of Facebook Inc. (NASDAQ:FB) in terms of users and “compelling upside” in its advertising, one Facebook advertising executive noted several challenges for Facebook in a recent interview with a trade magazine, in the midst of describing seven priorities. The challenges described were – not used the treasure trove of data that it has on its users for advertising purposes; Facebook Pages being free for marketers; the lack of mobile advertising applications; lack of Facebook Offers; consumer confusion due to the speed of new service offerings;  existing ad formats; and no current plans to utilize video advertising. All legitimate hurdles for Facebook Inc. (NASDAQ:FB) to overcome to be the revenue producer that Jefferies and others envision.

Investors will certainly be wary, but they also could be ready to buy now and make a bet that Facebook Inc. (NASDAQ:FB) stock is primed for a rally. This may likely include hedge-fund manager George Soros of Soros Fund Management.

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