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Facebook Has Plenty Of Revenue Growth Levers To Push
BY BRIAN DEAGON, INVESTOR'S BUSINESS DAILY
08:02 AM ET

As the world's dominant social network that recently hit a milestone with 1 billion people logging on in a single day, it could be said that Facebook (NASDAQ:FB) is just getting underway.

Facebook CEO Mark Zuckerberg announced the 1 billion people day on Aug. 27 with a Facebook post.

"When we talk about our financials, we use average numbers, but this is different," he wrote. "This was the first time we reached this milestone, and it's just the beginning of connecting the whole world."


On an average day about 968 million people log onto Facebook. Almost 1.5 billion people do so monthly. That's almost half the Internet users in the world.

Facebook stock has more than doubled since its May 2012 initial public offering, closing on Friday at 92.05. It has an IBD Composite Rating of 99, the highest possible, meaning it is outperforming 99% of all other stocks, considering a variety of factors such as earnings growth and stock-price gains.

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In the second quarter, revenue rose 39% to $4 billion, maintaining a long string of double-digit growth, year over year. Analysts say there's plenty of revenue opportunity ahead, with several growth levers either just getting started or yet to be pushed.

Facebook always has been conservative on how it monetizes its various platforms. In its early growth days the company absorbed hundreds of millions in annual losses, unwilling to pester users with a flood of advertising. As time went on, after plenty of tests and measurements, Facebook gradually began placing more ads, both on its desktop and then mobile applications.

Among the growth levers Facebook is now starting to push are video ads on its main News Feed platform and on its photo-sharing app Instagram. Further down the road are Messenger and WhatsApp — mobile messaging platforms with hundreds of millions of users.

Mobile now accounts for about 76% of ad revenue. By the end of 2016, mobile will likely grow to 80% of ad revenue, said Shebly Seyrafi, an analyst at FBN Securities.

"Facebook will continue getting more revenue from mobile," he said. "The next wave of growth will come from video ads, and then Instagram," Seyrafi said.

On Wednesday, Facebook announced an aggressive expansion of Instagram, saying that ads would be rolled out to 30 additional countries. Instagram is still a small revenue source for Facebook, but analysts estimate that its sales could exceed $1 billion in 2016.



Read More At Investor's Business Daily: http://news.investors.com/technology/091415-770809-facebook-revenue-growth-plans-include-video-instagram-messenger-whatsapp.htm#ixzz3liotU62G
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