Full Steam Ahead for Facebook Bulls
Shares of Facebook (NASDAQ:FB) added 2.9 percent to last week’s gains on Monday morning after an analyst at Raymond James gave the company a pre-earnings thumbs up. The firm increased its rating from “Market Perform” to “Outperform” with a price target of $38 per share, the same as the company’s IPO price.
The primary discussion about Facebook heading into its earnings report, due out on Wednesday after the markets close, is about monetization. The company’s struggling efforts on this front have been well documented, but more and more observers are filing the “struggling” descriptor away and brushing off descriptors like “improving.” Everyday, Facebook looks less like an adolescent company suffering from growing pains, and more like a robust titan in the tech industry.
Trade volume has slowly increased with the stock price, following a slump in activity in the late summer and fall. The novelty that was sweat out of the stock price after its IPO is being replaced by stronger fundamentals and clear revenue streams. Long-term bulls are reiterating “Buy” positions left and right, and the company’s stock is effectively right at the mean analyst target of $33.50…
What’s more, the market for online advertising looks big enough for Facebook, Google (NASDAQ:GOOG), and even Yahoo (NASDAQ:YHOO), should it round a corner and start claiming larger slices of the market instead of smaller. The market for display ad revenue is expected to reach $17.7 billion in 2013, and $20.69 billion in 2014. Both Google and Facebook are predicted to grow their market share at the expense of competitors, but Facebook may have an ace up its sleeve.
For the world’s largest social media network, the trend toward increased mobile usage is seen as a positive factor. ComScore recently released data that shows that Facebook is the most-used mobile app in the United States, claiming 23 percent of the total time spent on apps. The apps with the second-highest amount of time spent using them clock in at just 3 percent, meaning Facebook has an incredible lead over mobile competition. Facebook claims more mobile time than all of Google’s service apps combined.
Facebook has made significant strides in monetizing mobile use while increasing engagement. This is a trick that Google, Yahoo, and anybody else that wants to draw ad revenue from mobile will have to figure out. So far, it’s been an uphill battle.
Analysts are looking for earnings of $0.15 per share on $1.52 billion in revenue from Facebook in the fourth quarter. This would be an increase from earnings of $0.12 per share on $1.2 billion in revenue for the third quarter.