Facebook Incorporation is placed at the vanguard of the mounting social media industry and look glowing for delivering strong returns to investors moving ahead in positive direction. Many people think that Facebook’s run is over but it’s not. The social media bears may be doubtful about Facebook Incorporation’s forecast and the company’s up to date $19 billion of acquisition of WhatsApp may have many speculating that the company is going to lose big birds on the deal but the stock continues to leapfrog analysts’ price targets and keeps towering to immense heights. Shares in the company today are worth almost 112% more ever since its sloppy trading debut on the NASDAQ. By the way, NASDAQ is the stock market and one of the largest stock exchanges in the United States. Facebook may be a free website but that doesn’t mean that it will be a cheap investment. It was a long and hard first year for Facebook shareholders. The stocks of Facebook went down from $45 to $18 in just four months, the backlash began and the investors became edgy. However, most of the critics have just vanished away as last week Facebook reported its socks-off earnings report. According to Facebook, 819 million users access the site using a mobile device every month and that is an increase of approximately 40% over the previous year. The importance should also be given to Facebook’s more than 1 million advertisers who want their content seen by the users. The icing on the cake was the $1.6 billion in advertising revenue, an increase of more than 50 percent over the last year’s results. With Facebook stock priced at $77.26 USD at the NASDAQ and have seen an increase of 1.72% in last 24 hours as we are reading this, Facebook stock moving firmly in disobedience of gravity, I believe that investors should take positions in it and carefully look on the five reasons to buy Facebook stocks.
- Facebook’s User Foundation
Social media networks rely on escalating their user base and then leveraging new users to grow. Many social media networks today blow your own horn but Facebook with a user base of over one billion does top the list in this regard. Those who believe that Facebook will observe a turn down in its user base in the near outlook now can stop worrying. The company has grown from 482 million active users in 2010 to 1.23 billion at the end of 2013. The company said that 170 million new users joined the service last year and to keep an eye, that was equivalent to almost Twitter’s user base in 2013. Facebook is the market leader with 73% of its 2013 monthly user base comprising mobile users and its share in handheld social media looks set to continue growing as Smart phones and tablets carry on expanding into the market. According to comScore, users spent more than a part of their time online browsing the social media websites during last few months. Each user on the internet spent 1,419 minutes online and out of that 28% of the time was spent on Facebook. While for the Google & YouTube this share goes to 16% & 14% respectively.
- Punching Moneta
Social media networks needs to have the ability to influence its user base to generate revenues & for Facebook their source of revenue has been besieged advertisements. Facebook’s ad revenues have seen a stable growth in the last five years as they have influenced their advertisers to give Facebook a higher rate per ad & now they generate 90% of peak streak from advertisements. Analysts in United States estimated that Facebook had a 48% market share in the total $14.2 billion of global social advertising market. They also believed that Facebook’s market share would be maintained into high 40s percentage as the social media advertising is endlessly increasing. The total social media advertising would be near to $31 billion by the end of 2016.
Facebook has made some calculated acquisitions that in the end result in increased share price. Some of its important acquisitions are photo-sharing application Instagram for $1 billion and then the commonly known chat application WhatsApp for almost a sum of $19 billion. Whatsapp has been Facebook’s biggest acquisition and its 460 million users have also helped Facebook boost the customer engagement. Well the common word in every mouth in United States is that Facebook is also going to acquire Titan Aerospace. It is a leading information technology news website and it is worth $60 million. Facebook is trying to increase its reach towards global market by acquiring different companies. Facebook has also launched its apps so that people with slow networks can also access the stage by saving time and charges.
- Facebook Stock Price Concert
Facebook stock have outperformed not on one single stage but simultaneously on different positions. NASDAQ and Global X Social Media have seen growth of 32% & 56% but Facebook stock has risen almost by 150%. Now that’s not ordinary performance & that is the major reason to get a buy-in the Facebook stocks. Facebook has also grown more than its competitors, as compared to Twitter & LinkedIn. LinkedIn share price has just risen only 17% whereas Twitter Incorporation experienced a 126% rise in share price but as mentioned above Facebook touches way above the mark of 150%.
- Facebook Appraisal
Facebook’s existing stock price is 15 times its projected sales over the subsequently 12 months which is also a 26% premium to standard Price to Sales ratio of Facebook. Facebook as compared to LinkedIn & Twitter is also trading at a premium. Facebook is trading at a 12.3x P/S ratio, LinkedIn at 8.1x P/S ratio and Twitter at 11.7x P/S ratio. Facebook seems an expensive buy but it deserves that due to owing of its huge consumer foundation, confirmed monetization strategies, growth prospective and the leadership place in social media as well as social media advertising. The acquisitions such as Instagram & WhatsApp has also put Facebook at front row of social media & boosted the confidence of investors.
Lastly, Facebook owns approximately 50% of social media advertising and that too globally which makes company an unchallenged leader in their industry. Global social media and social media advertising in the world is endlessly going to increase as mentioned above so Facebook’s stock price is expected to move up too as they are the leader in it. The above mentioned are the five important points that you must read and buy the Facebook stock as early as possible. These are the top 5 reasons that I believe will give everyone the buy-in the stock of Facebook.