Facebook Inc (NASDAQ:FB) is without a doubt, the internet’s social media juggernaut.
It’s up 20% year to date, outpacing the S&P 500 Index, which are basically the big firms that make up the backbone of U.S. industry and financials. It also has significantly outpaced the tech-heavy Nasdaq Composite since its initial public offering.
As of now, FB has built a social media empire that includes Facebook, Instagram, Messenger, WhatsApp and Oculus. It has continued to execute on these various ventures, growing users as well as revenue.
But the real success factor for FB is advertising revenue. It makes up about 95% of FB’s entire revenue. And advertising is taking off. It’s not just about advertising on each platform where there’s opportunities, but across all the platforms. And remember, FB has written all the privacy agreements to its advantage regarding exposing users to advertising generated by FB.
For example, FB can theoretically identify a WhatsApp post — location, time, activity — and then send advertising your way that is specific to what you’re already doing. Having a drink? Here’s another bar to check out — and here’s a coupon for a free appetizer.
The permutations are enormous and that is what is so compelling about FB’s ability to grow.
FB Stock: The Revenue Stream Keeps Growing
You see, most businesses are growing their client base as an indicator of success. FB has billions of subscribers and now it is finding the best ways to monetize all these people it already has. The thing is, once you have a receptive audience and people who are regularly checking the site, the advertising dollars flow from that.
And now FB is pumping more money into finding ways to advertise across all its platforms.
Market research firm eMarketer estimates that online advertising will nearly double to $120 billion in the next four years. And FB is grabbing increasing amounts of that. And all of this is going across mobile as well as laptop and desktop platforms — the advertising becomes portable.
Also, now that FB has launched its virtual reality device Oculus Rift, along with VR games, it is looking to integrate VR into the various platforms as well as reach out to the gaming community.
It recently announced a strategic partnership with gaming company Unity Technologies, the largest global development platform for creating 2D, 3D, VR and augmented reality games. By working with Unity to build games that can launch on Facebook or one of the other apps, FB will be integrating its only non-social business into the world of social media.
This is likely to bring another massive revenue stream along with it.
And best of all, this growth is going to happen regardless of economic or market conditions. Its price-earnings ratio of 60 is high, but it’s one of the few firms out there that’s throwing off real growth these days.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
