Facebook Inc (FB): This Could Move The Stock Higher


Revenue growth continues to be a key and closely watched metric. The Menlo Park, Calif.-based company has impressed with robust year-over-year (YOY) growth rates for the last four quarters. In Q1 2014, FB posted revenue of $2.5 billion, handily ahead of the $2.36 billion analysts were looking for and a 72% increase compared with the $1.46 billion booked in Q1 of 2013.

Analysts expect revenue of $2.81 billion for Q2 2014, up 55% YOY. While that would be a healthy growth rate, it would also mark a notable growth slowdown. It could also be a sign that FB’s meteoric revenue growth rate has peaked.

This next metric already accounts for the majority of Facebook’s revenue – and there’s still plenty of room for growth ahead…

Mobile Advertising

Mobile ads accounted for 59% of FB’s revenue in Q1. That was up 30% YOY and came in ahead of the 56% industry experts had projected.

Early forecasts have mobile ad revenue showing continued strength, accounting for 62% of FB Q2’s revenue.

More importantly, there is still room for more growth in the mobile arena. According to a report from Gartner, the global mobile advertising market will grow from $13.1 billion in 2013 to $41.9 billion by 2017 at a compound annual growth rate of 34%.

Facebook continues to improve the relevancy of the ads that reach users. Improving ad relevancy doesn’t just help marketers grow their business, it also improves Facebook’s ad click-through rates.

Daily Active User Count

Facebook’s member count has swelled to about 1.28 billion. That whopping total is one of FB’s greatest competitive advantages.

Over the last several quarters, however, a greater emphasis has been placed on daily active user count – especially from advertisers. The tally in Q1 was 820 million, up 6% YOY. That figure is expected to increase 4% in Q2 to 834 million.

Facebook breathed a sigh of relief last month when a Forrester Research survey found FB remains teen users’ favorite social media site – by a long shot.

Some 28% of teens who are on Facebook say they use it “all the time.” That was a higher percentage than teens said about any other social media site.

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