Following suit to its impressive earnings in yet another quarter, reports now suggest that Facebook stock has the potential to rise over 20 per cent the following year(i.e 2018). And Barron’s report attributes the same to the growing ad revenue among all of its platforms.
The Facebook stock price has been ticking at around $124 a share and given its recent acceleration in growth of its multitude of businesses, is expected to rise 24% and hit $153 in just an year. And according to reports, this figure is attainable part due to its successive increase in mobile ad load, or the number of ads Facebook can serve up to its users.
Though the list of reasons for doubt against Facebook is miniscule, mobile ad load, is being seen as the key investors concern. You ask why?
Because though the social networking giant’s ad load has been growing steadily, year after year, it could soon have a negative impact on the company’s revenue growth. But, they also believe that Facebook has enough time to re-strategize and turn their ads into transactions. Also, it still has other venues, including Instagram, Messenger, and WhatsApp, which have yet to fill up on ads and sponsored content.
Taking a first step towards user experience, Facebook has recently also added some ad bocking controls to its platform. It believes that by giving more control over ads, it will be able to make the user experience richer and much more appealing.
However, analysts also believe that Facebook has lost its appeal among youth under the age of 25, and could lose a huge portion of mobile users in the long run. It has already lost a significant portion of its users to ephemeral video messaging app Snapchat, who also has a strong ad program. But, now Facebook has debuted a teen-only video social network created by 19-year old product manager Michael Sayman to rival the aforementioned, called LifeStage.
The report also sheds some light on Facebook’s upcoming revenue projections and adds,
Anyway, slowing growth seems already built in to the stock’s valuation. The consensus has Facebook’s revenue rising 51% this year, to just over $27 billion, followed by 35% growth next year, 28% in 2018, and so on.
This quarter results, like none other, also saw a significant portion of the social networking behemoth’s revenue come from mobile advertisements. The company made $6.24 billion in advertising, almost 84% of which stemmed from mobile devices. Also, Facebook’s overall revenue surged by 56 per cent year over year.