Facebook Ad Rates Will Soon Match Google's: Pachter

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July 25 (Bloomberg) -- Michael Pachter, managing director of equity research at Wedbush, explains his upgrade of Facebook stock due to the growth in advertising revenue as their ad rates begin to climb and the potential for monetizing Instagram in the next year. He speaks on Bloomberg Television's "Market Makers."

Way.

There is a lot to do, for sure.

Thank you so much, jon, our senior west coast were spawned.

It was like facebook shares are at the highest.

Some analysts are capitulating on their calls.

Joining us is michael pacter.

He raised his price target from 35 dollars a share to $39 a share.

Is it on this mobile story?

Is that what has impressed you?

I am clearly impressed, but that is the basis for my upgrade.

The basis is that the ad rates but they are getting have been going up dramatically.

If you look at the growth in advertising revenue, it is vastly outpaced the growth in users of the growth of -- clearly, they're getting much better ad rates.

Some of that is they are monetizing mobile better, of course.

A lot of it is just they are doing a lot more local advertising, penetrating internationally.

They are starting to convince advertisers that facebook is an alternative to advertising on google or twitter.

That is a battle they're certain to win.

I think we're setting to see it.

I don't think that we are even close to the limits of what these guys can charge for ads.

I think he will deliver more frequently and innovatively and far more targeted.

I think you will start to see numbers closer to or approaching what google does as opposed to looking at yahoo.

Is going to be a great company.

A huge endorsement for the advertising business of facebook.

Do you think if they can take that model and transcend it to monetizing instagram and some other products like and graph search and all these others?

I am not sure that home was intended to monetize the same way.

Graph search, for sure.

Instagram is immediate.

Was he advertising probably as soon as this quarter.

They have to lap the sponsor stories.

I think he was the interstitial video ads right before you when you watch any video.

I think because that is to grab video is coming from a friend of yours, you're going to sit ad.

It is a lot more palatable.

I think you will see massive monetization with instagram sometime by september.

I think that is the big wrote the story next year.

Mark zuckerberg on the conference call highlighted engaging local business advertising for stud why is this important?

Local ads are more expensive for view the national avenue.

That makes sense because your local dry cleaner does not want to advertise across country.

The surface of the giants do not want to advertise in new york.

Local ads are willing to pay higher rates for view as national ads.

That requires a salesforce so you have a higher cost deliver.

If you get four times the revenue at the cost, it is a good deal.

I think facebook is headed that way.

They had to be headed that way because that allows them to use the demographic information may have about you and your preferences and your location to their advantage.

Advertisers really do want that.

Mobile continues to be a bright spot.

The revenue growth came in negative.

Are you concerned there is as essential chunk of the revenue in the desktop sector?

Novae think jon erlichman pointed out that daily active users are of germanic we are mobile.

That is because you carry facebook with you wherever we go.

I think what really happens is, for many people mobile is a substitute for desktops.

For a lot of people, it is a supplement.

They are on both.

I think that is why you're going to see a balance.

I am finding if desktop revenues grow slowly and mobile grows rapidly.

I don't think it matters.

Advertisers want to reach you whenever you're doing something on the internet.

Any page of the potential to be monetize.

Facebook is going where the users are.

I don't did it make much difference.

I know you raise your price target to $39 a share.

When do we see that happen?

I honestly think you will get it within 12 months.

I think you may get it within a quarter because if these guys watch instagram video and our

This text has been automatically generated. It may not be 100% accurate.

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