We have issued an updated research report on Facebook, Inc. FB on Mar 31, 2015. The company has been taking strategic initiatives to drive growth by providing smarter and integrated offerings to enhance customer experience. As such, the company introduced a number of important features and updates in its latest F8 developer conference.
Facebook’s strength is its huge user base and the company is giving it all to boost it further. At the F8 conference, the company announced a number of key additions to its Messenger in order to offer more value to each of its users ranging from individuals to businesses. The company also updated its growth strategies for acquired platforms like WhatsApp, Oculus etc.
As per recent statistics, Facebook messenger app has now about 600 million monthly active users (up from 100 million in Nov 2014) while WhatsApp witnessed its users grow 100 to 700 million in the short period from Aug 2014 to Jan 2015.
Apart from a massive user base, another key growth catalyst is the company’s strength in mobile, which will continue to outpace growth in desktops, going forward. Facebook has significant growth potential from increasing online and mobile advertising spending.
Moreover, Facebook is popular in many emerging markets where most new users start with mobile. Since developed markets have relatively higher penetration rates, this positions Facebook for strong growth in the next few years. In the U.S. too, the company is likely to benefit from its strength on the mobile platform.
All these triggered an upside in the Zacks Consensus Estimate. Positive estimate revisions over the last 7 days led to an increase of 0.8% in the Zacks Consensus Estimate to $1.29 per share for 2015. For 2016, the Zacks Consensus Estimate inched up 0.6% to $1.81 per share over the same time frame.
However, growing competition from the likes of Google Inc. GOOGL, Twitter TWTR and LinkedIn Corp. LNKD along with limited growth opportunity in areas with low Internet penetration and government regulations in some emerging nations can prove to be a challenge for this Zacks Rank #2 (Buy) company.
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