What Is The Upside To Facebook’s Ad Revenues Now That It Has Over 2 Billion Users?
Facebook (NASDAQ: FB) is the undisputed leader in the social media space. On June 27, the company said that its monthly active users have crossed the 2 billion mark, further extending its dominance over other social websites such as Twitter (328 million) and Snapchat (255 million). Considering that Facebook also owns Instagram (700 million active users in April 2017) and WhatsApp (1.2 billion active users), we estimate that Facebook internet platform has close to 59% penetration, as illustrated below in the table:
What Can Be The Upside To Facebook’s Ad Revenues?
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Facebook generated nearly 97%, or $26.89 billion, from online ads in 2016. Based on our base case assumptions, we currently forecast that advertising revenues for Facebook will increase to $88.4 billion by 2022, second only to Google. With the latest update on unique monthly subscribers, we believe that the upside to Facebooks’s revenues and stock price can be significantly higher. We estimate that the unique subscriber base across the platforms can be 64% of estimated Internet users by 2023. This can translate into revenues close to $133.7 billion, as illustrated below:
See our complete analysis for Facebook
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