) stock has dropped from its recent high of $32. While that may not
be what investors or analysts expected given the company's
performance in recent quarters, there are some positive reports
that are worth considering.
According to research firm IDC, smartphone users access Facebook
about 14 times a day. This research was based on a survey conducted
among approximately 7,500 iPhone and Android users. While the
research excludes Blackberry and other mobile operating systems
such as Windows 8 mobile, we believe the results will not be too
far from reality given that the iOS and Android operating systems
are present in most of the smartphones. This reinforces the
importance of mobile and resonates with Facebook's efforts to
monetize the mobile platform.
Facebook is seeing more success with its mobile monetization. It
has a tremendous opportunity to leverage its user data to better
target advertisements as well as improve and fine tune the current
ads. Going into 2013, the company will continue to focus on ramping
up its mobile advertising and maintaining healthy revenue growth
that has reinforced investor confidence in recent months. The usage
on desktop is declining and Facebook will be spending a major chunk
of its resources in optimizing its business model on the mobile
platform. The company saw the ad revenue contribution of the mobile
platform increase from about 14% in Q3 2012 to 23% in the fourth
See our complete analysis for Facebook
In addition to the above, Facebook has also improved its mobile
install app ads to better target these ads towards relevant
customers. Efficient targeting not only reduces ad clutter and
improves user experience, but it also allows Facebook to charge
higher ad pricing.
Further, Facebook is also looking at ways to create value for
automotive owners and might come up with some special features that
will help connect people through their in-car systems. The company
is in talks with Ford regarding this.
Finally, Business Insider recently reported multiple results
from research done around estimating the value of the "like"
feature on Facebook. While the results vary widely, according to
the methodology and data considered, the essence is that marketers
are seeing a lot of value in Facebook's platform. This bodes well
for the company's ad revenue growth.
Our price estimate for Facebook stands at $25
, implying a discount of about 5% to the market price.
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