Facebook Inc: This Is a Blunt Reality Check for FB Stock Bears
Having Doubts About Facebook Stock?
It’s easy to miss things that are right under your nose, which is probably why some investors overlook Facebook Inc (NASDAQ:FB). They forget that Facebook stock (FB) has delivered extraordinary gains over the last few years.
It doesn’t matter that FB stock is one of the most valuable assets in the world; it still has room to the upside. Its share price grew 303% since its initial public offering (IPO).
Let that sink in … FB stock didn’t just double, or even triple, in value.
It quadrupled. This means Facebook stock is worth four times more than it was in 2012. Those are the kind of returns every investor dreams about. What’s even more remarkable is that Facebook could keep growing at this rate for a long time. These gains are just the tip of the iceberg.
In fact, there’s a chart which proves this better than I could with words. For any of the FB stock bears who are reading this, sorry in advance. I know this is a disastrous blow, but you can easily join the winning team and get on board.
Don’t listen to the nonsense that “no one uses Facebook anymore.” This chart absolutely shatters that myth. It lists the most popular apps in the United States by the number of people who open the app at least once a month. Facebook was number-one on the list, and not just for social media apps; for all mobile apps.
Facebook still has 149.7 million people who open the app on their phone every single month. By itself, that suggests FB stock has a strong base for continuing its record gains. But look at the number-two spot. It’s held by “Facebook Messenger,” which is opened by 131.6 million people a month.
This means Facebook is still the most dominant force in mobile apps.
Why This Matters for FB Stock
You may be wondering how Facebook’s mobile apps connect to the company’s share price. It’s very simple. Almost 97% of Facebook’s revenues come from advertisers. These advertisers want people to see their ads, so they pay whomever has the biggest audience. Facebook has the biggest audience.
To be more specific, Facebook crushes the competition when it comes to mobile advertising. As you saw in the chart above, they own the two most popular mobile apps in America. This is especially important because consumers are spending more and more time on their smartphones.
Advertisers see these trends. According to recent reports, they plan to spend more on mobile ads than on desktop ads by 2017. The numbers come from a research firm called ZenithOptimedia.
Zenith says that advertisers will dish out $99.3 billion for mobile ads in 2017, which is two percent above what they’ll spend on desktop ads. (Source: “Mobile Internet Ad Spending Will Pass Desktop For the First Time in 2017,” Fortune, June 20, 2016.)
Since Facebook is the dominant force in mobile apps, it makes sense that they’ll benefit from this surge. Just look at revenues over the last few quarters. “Mobile advertising revenue represented approximately 84% of advertising revenue for the second quarter of 2016,” read Facebook’s earnings report.
It reflected a rise of “approximately 76% of advertising revenue in the second quarter of 2015.” (Source: “Facebook Reports Second Quarter 2016 Results,” Facebook Inc, July 27, 2016.)
Facebook has a huge slice of the mobile advertising market. They are the official gateway to consumers. Whether it’s for video content, news articles, or advertisement, there’s simply no company that can match Facebook on mobile.
Like I said earlier, that may seem odd because Facebook is so integrated into our lives. It’s how we remember birthdays, plan events, and talk to distant friends. But that’s “Facebook” the social media app; I’m talking about Facebook the stock.
Believe me, all bearish investors need to take a second look at FB stock. It’s one of the best investments on the stock market, hiding in plain sight.