Is Facebook Too Big To Grow? Not Yet!

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This week has been a bit crazy as heavy hitters have been releasing their quarterly reports. While many of them, including Microsoft, Caterpillar, and Procter & Gamble produced nothing more than disappointment, Facebook has increased its earnings exponentially. In the past, some experts have asked the question, “Is Facebook too big to grow?”. The answer…Not yet! Today, we’ll talk about their earning report, what we can expect throughout the next quarter, and whether or not Facebook is a good investment moving forward. So, let’s get right to it.

Facebook’s Ramps Up Mobile Ads

We’ve all known that Facebook is a key player with more than a more than 15% market share in mobile ads. However, I don’t think anyone had any idea how big mobile would prove to be this quarter! So, how big is mobile advertising? Big enough to make up 69% of Facebook’s overall advertising sales with mobile ad revenue topping $1 billion in a single quarter for the first time in history. While mobile ads are nothing new to Facebook, the growth in the department’s revenue is a sure sign that the work the company has been putting in has its rewards.

Multimedia Is A Growing Trend

In a post I wrote for Anyoption.com in December titled “Is Google Really…Scared?” I talked about Facebook’s big moves in multimedia. Facebook knows that succeeding in mobile ads is a great accomplishment; however, the world of internet use is changing and video is becoming more and more important. So, recently, Facebook has been tunneling funds into its multimedia operations with a goal to exceed YouTube’s market share in online streaming video.

It seems as though the company’s push to streaming video is really paying off. As a matter of fact, one of Zuckerberg’s key points in his release was the fact that Facebook is serving more than 3 billion video views every day!

The Numbers Investors Care About

  • 4th Quarter Revenue – $3.85 billion.
  • 4th Quarter Earnings Per Share – $.054

Looking Forward

While Facebook is a huge company that never stops amazing investors, the way consumers use the internet is changing and it’s more important today than ever before that the company keeps its eyes on the prize. Here are a couple of ways the way we use the internet is changing…

  • Mobile Internet Usage – Multiple studies show that while viewing the internet on a desk top computer is not as common today as it once was, mobile internet usage is on the rise and in a big way. There’s no doubt in my mind that Facebook is doing a great job of converting mobile traffic to revenue. However, as more and more of the world turns to their phones instead of their computers, Facebook will have to continue to create a better and better experience for users on the go.
  • Streaming Video Growth – I’ll admit it, I watch far more online videos these days that I ever have in the past. And studies show that I’m not the only person that watches more video online today than in the past. As a matter of fact, streaming video views are on the rise and to stay relevant, Facebook is going to have to continue its efforts there.
  • Spending – While Facebook’s revenues are higher than they’ve ever been, so is their spending. With so much effort going into expanding streaming video, connection around the world, and perfecting the mobile advertising system, Facebook’s expenses are astronomical. I think that if Facebook is going to run into a challenge anytime soon, it’s going to be keeping their spending in check as they develop a better experience for users and advertisers alike.

Is Facebook A Good Investment Moving Forward?

In my opinion, not only is Facebook a good investment for the short term, it’s a great investment for the long term investor as well. The company has proven time after time that they are capable of breaking through barriers and staying on top of the trends. This is one stock that I don’t see falling any time soon.

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