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Facebook (FB) Stock Could Soar If the Social Graph Takes Off

Facebook Inc. (FB) stock stayed comfortably around $30 on Thursday, maintaining a months-long high for the stock that started on Monday. 

But FB may soon see shares soar, some experts believe, especially after it's recent announcement of the new Graph Search function. 

"Advertising could benefit from better ad targeting as the natural language search queries will be more detailed, personal and the results will be more accurate," said Brian Blau, an analyst, to Computerworld. "So there will be advertising opportunities on Facebook that were not available previously."

The Graph Search could be special. It's kind of like Yelp meets Google search meets what your friend told you about something yesterday.

For instance, if a user searches for the best Chinese restaurant in town, Facebook can use keywords on that search to offer the user-specific advertising ... something companies will big pay for. 

The social search effort (a.k.a. Knowledge Graph Sales) is different from a massive open search initiative. A social search is a closed search that finds things that are shared with friends (preferences, pictures, etc.). 

The new feature could fill an advertising void that has plagued Facebook over the last two years. If the company pulls it off, their search-related ads would be more powerful than Google's. 

They do, though, have to pull it off. This is all so yet-to-be-proven. 

The Graph Search met some critics when it was announced, especially because it wasn't clear what the function could actually achieve, especially in the long-run. The confusing search-but-not-mass-search hasn't resonated powerfully in the days since the announcement.

FB stocks opened at $32 Monday morning for the first time since July, just ahead of of the cryptic announcement of the Graph Search function. The stock stayed stable ... but didn't spike ... in the days since.

Investors had hoped for a “big” announcement; there have been none since the IPO, yet FB stock has increased 60% in the last three months, according to CNBC. Good news about the monetization of the FB mobile business would have really been a boon to the stock price, as would new software developments for mobile.

Still the Graph Search was at least a start, and shows that FB is thinking critically about monetization.

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