Mystery Facebook Event: Five Things that Could Happen

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With little to go on, speculation has run rampant as to what will be announced at tomorrow's (Tuesday's) mystery Facebook event, with new gadgets and M&A activity topping the list.

The social networking giant sent reporters an invitation last week that simply said to "come and see what we're building" on Jan. 15.

The initial buzz ignited quite a rally in Facebook stock, sending shares up more than 9% last week after the invitations went out. Since the start of 2013, FB shares have been on a tear, up some 20% year-to-date.

Cantor Fitzgerald just made Facebook Inc. (Nasdaq: FB) one of its "highest conviction calls" for 2013. Plus, JPMorgan Chase & Co. (NYSE: JPM) elevated FB shares as a "top large-cap pick" for the Internet sector. Both firms are upbeat on the traction Facebook is making in the mobile arena.

While some are excited about Tuesday's secretive event, others are not expecting much. In that camp is Wedbush analyst Michael Pachter, who has closely been following the company since before its initial public offering.

"I have low expectations," Pachter told MarketWatch, citing the proximity to Q4 earnings, which the company will announce Jan. 30 after the close.

On the other hand, Topeka Capital's Victor Anthony is more expectant and believes the announcement could be "meaningful."

Here are five things that could happen at Tuesday's Facebook event.

Facebook Event: Five Possible Announcements

  • Facebook smartphone

Garnering the most buzz is chatter that some kind of Facebook phone will be on display Tuesday.

But don't bet on it.

Several analysts say a FB smartphone right now is a long shot. The social network behemoth has told tech giants Google Inc. (Nasdaq: GOOG) and Apple Inc. (Nasdaq: AAPL) it has no plans on creating a phone.

CEO Mark Zuckerberg has also brushed off the notion.

At September's TechCrunch conference he said, "It's a juicy thing to say we're building a phone, which is why people want to write about it. But it's so clearly the wrong strategy for us."

  • Search engine

Better search options on Facebook's site would be a welcome addition. It probably wouldn't be anything Google would have to worry about, but it could be consistent with recent updates to FB's privacy settings. It would also be an olive branch to Instagram users who defected amid recent changes to service.

Facebook paid more than $1 billion for the startup less than a year ago, and wants to hang on to Instagram's millions of photo app users.

  • New tech tie-ups

Facebook is always looking for ways to keep people coming back to the site more frequently and longer periods of time. A tie-up with internet music leader Pandora Media Inc. (NYSE: P), or streaming TV and movie leader Netflix Inc. (Nasdaq: NFLX), would benefit all parties that are clamoring for additional traffic.

  • More costly messaging service

An enterprising Mashable (a leading news source for social networking) reporter tried to send CEO Mark Zuckerberg a message on Facebook following the media invitations and received a note that said his message would get lost in the honcho's spam filter - but that for $100, Zuckerberg would surely get it (no word if he would answer it).

When Business Insider tried to recreate the scenario, it didn't work. But, this savvy bunch surmises that Facebook is testing out its new service discussed in late 2012 to charge users $1 for every message sent to someone they're not friends with on the site. The buck is meant to ensure the receiver gets the message, and the communication isn't tangled amid the site's spam filter.

  • Advertising initiatives

As Facebook morphs into a true mobile company, engaging mobile users through ads is key to Facebook's success. The company could announce a plan for more video and interactive ads, as well as ads that connect members.

Whatever Facebook unveils Tuesday, it better be big.

"If they don't deliver against expectations that they just created, you're going to see a sharp selloff in the stock. I think they know this, so I think whatever it is has to be meaningful," Topeka Capital's Anthony shared with MarketWatch.

Facebook stock was trading around $31.31 Monday afternoon, down just over 1% from Friday's close.

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