Facebook Mobile has been rapidly expanding its reach, growing
from 100 million users per month in February 2010 to 250 million
users per month in March 2011. Should this type of growth continue,
there could be upside to our intrinsic value estimate for Facebook,
which we currently peg at $45.1 billion
. Facebook competes with Google (
), Yahoo (
), Microsoft (
), AOL (
) in the text and display advertising market as well as the search
Facebook Mobile Users Expected to Increase
Until recently Facebook had two mobile web setups -
touch.facebook.com for large touchscreen phones, and m.facebook.com
for other feature phones. Now Facebook is merging these two
websites into one, enabling Facebook engineers to deploy features,
tweak user interface elements and optimize graphics easily for all
Facebook Mobile users in one go. This will help users access any
and all Facebook features that their phone hardware can support.
This will especially help feature phone users, considering that, as
of February 2011, only 30% of handsets in the U.S. were
The comScore report also points out that only 27% of U.S. mobile
users accessed social networking sites or blogs in February 2011.
This gives a lot of running room for Facebook to increase mobile
usage of its platform.
How Facebook Earns Revenue from Text and Display
Text and display ads
account for more than 60% of Facebook's value by our estimates.
Facebook Social Ads are mainly self-serve ads that can be targeted
to appear to specific users. Facebook makes money based on how many
pages are visited and the bidding rates on these advertisements.
Facebook offers both cost per click (
), for which advertisers pay only when users actually click on the
advertisement, and cost per thousand impressions (CPM), for which
advertisers pay based on the number of times these advertisements
are displayed on user pages.
Higher Page Views per User Could Mean 12% Upside to
As more users access Facebook from mobile devices, the number of
pages viewed per user will rise. While we currently estimate 2%
annual growth in Facebook's page views per user, a 4% annual growth
in this metric (to 545 monthly page views per user) would imply 15%
our $45.1 billion value estimate
. This scenario would put our estimate for Facebook's value at
about $51.6 billion.
You can drag the trend line in the interactive chart above to
test this scenario, and others, and see the potential impact on
See our complete analysis of Facebook here