Why Facebook Stock Rose 4% Last Week

Why Facebook Stock Rose 4% Last Week
January 31, 2017

Shares of Facebook, Inc. (FB) continued their dominant start to 2017, and thanks to a recent hire, the social media giant might have signaled its next area of revenue strength.


Facebook stock closed Friday at $132.18, down 0.45%. However, this translates to a rise of 4.05% from last week's close of $127.04. As it stands, the shares, which now hover near all-time highs, have risen more than 11% in two weeks and are up some 15% year to date. This compares with a 2.5% rise in the S&P 500 index (SPX). While Facebook shares don't appear cheap at current levels, it's tough to bet against the company's recent moves.


Last week, the Menlo Park, Calif.-based tech giant hired Hugo Barra, who spent more than three years as Chinese phone maker Xiaomi's international chief, to become its vice president of virtual reality. Before that, Barra served as head of Alphabet Inc.'s (GOOGL) Google Android. The areas of virtual and augmented reality have been a focus for Facebook CEO Mark Zuckerburg ever since the company acquired Oculus for more than $2 billion in 2014.


"Hugo shares my belief that virtual and augmented reality will be the next major computing platform. They'll enable us to experience completely new things and be more creative than ever before. Hugo is going to help build that future, and I'm looking forward to having him on our team," Zuckerberg said in a Facebook post announcing the hire. Barra will be in charge of "all of our virtual reality efforts, including our Oculus team," the CEO added.


Beyond Alphabet, Facebook will be taking on Sony Corporation (SNE) and Microsoft Corporation (MSFT), which have both placed bets in the realm of VR and AR. But given Facebook's early lead and strength on Oculus' headsets, not to mention the breadth of its platform, it will be tough to expect anything other than VR/AR leadership from the company. And Facebook's stock price has begun to reflect that optimism.


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