Facebook's ( FB ) 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 quarter.
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.