Tomahawk, WI 12/10/2013 (BasicsMedia) – Facebook Inc (NASDAQ:FB), the world’s largest social network is on every smartphone, tablet and desktop but it is yet to make its entry in the S&P 500. Despite that, the social networking site’s third-quarter earning report was better than many analysts had anticipated and the company’s stock reached its highest level yet this year. Investors continue to speculate about when the firm will finally be added to the blue chip index.

Is Facebook Inc (NASDAQ:FB) Dipping?

Facebook Inc (NASDAQ:FB) announced on Oct. 31 that it earned $425 million, or 17 cents per share, in the third quarter. Adjusted earnings were $621 million, or $0.25 per share which was $0.06 better than analysts had anticipated. Revenue grew 60% to $2.02 billion and analysts were expecting revenue of $1.91 billion. But some analysts were quick to wonder what is wrong with the company because while the doubled up, it is now dipping.

Facebook Inc (NASDAQ:FB) has a market value of 119 million dollars and is the largest traded firm that is not in the S&P 500. The company did have a volatile IPO and a sudden subsequent fall and many investors have had a difficult time trusting this stock. Analysts however believe that there is no reason for investors to worry about their investment in the firm over the long term because it has continued to strengthen and push beyond its IPO levels.

S&P 500, it’s a Matter of Time

It’s only a matter of time and the company will be added to S&P 500. An analyst of Needham & Co Laura Martin believes that the question is not if, but when the social network will be added to S&P 500. Martin believes that the firm cannot be ignored any longer due to its vastness and profitability. Martin cites the case of Google Inc (NASDAQ:GOOG) and is of the opinion that it is very likely for the social networking site to be added to S&P 500 in about three months. She observes that S&P delayed the addition of the search engine giant into the index for 19 months. After the Google Inc (NASDAQ:GOOG) became a public company in August 2004 in March 2006, the company was added to the S&P 500.

Revenues from Mobile

Facebook Inc (NASDAQ:FB) is approaching its 19th month as a public firm and the S&P has a methodology where initial public offerings are seasoned for 6 to 12 months before they can be considered for addition to the index. While the company has managed to improve its revenues from mobile which account for about half of its total revenues, the rise in mobile usage might actually harm its valuation over time. A sharp rise in mobile users in part cannibalizes the number of daily active users (DAUs) particularly in the USA and Europe where there is a decline in personal computer DAUs.

The raise in DAUs is actually coming from Asia where there is a low profit margin that might in time affect the company’s profit margin. Nonetheless, the company has continued to improve its mobile platform and has engaged its users and reached out for new regions and this is likely to maintain its growth rate. As investors in the company continue to await the announcement makes the company part of the S&P 500, Facebook Inc (NASDAQ:FB) continues to strategize for growth.

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