Gifts giving boost to Facebook's stock

Associated Press

NEW YORK (AP) — Shares of Facebook rose Friday after the social networking site announced a new service that will let users send gifts to each other, marking its first real foray into e-commerce.

THE SPARK: On Thursday, Facebook said that it is launching a service named Gifts that will allow users to send chocolate, coffee, socks and other real-life presents to one another. The service rolled out to a subset of users in the U.S. Thursday and will be available to more Facebook users over the coming months.

Facebook will take an unspecified cut from each item sold.

THE ANALYSIS: Cantor Fitzgerald's Youssef Squali said in a client note that this service gives Facebook a new revenue stream. "Gifts alone may have a relatively small impact, but we expect many more innovations over time," the analyst wrote.

Squali maintained a "Buy" rating and $26 price target.

SHARE ACTION: Facebook Inc.'s stock added $1.45, or 7.1 percent, to $21.77 in afternoon trading. The stock has traded between $17.55 and $45 since going public in May.