Facebook (FB - Analyst Report), which became available to the public in 2004, has become a digital icon, and Mark Zuckerberg has ensured it stays on top of its game and king of the industry. Everyone is at least somewhat familiar with the social media site and it is estimated that 20% of the globe’s population is on Facebook.
However, many tend to overlook whether it will it continue to thrive and dominate or will it succumb to its challenges? We will examine Facebook’s prospects below before drawing a sound conclusion:
There is doubt over Facebook’s reign as king, while others claim it is still in its golden years, and that it still has time to grow and dominate. On average, there are about 1.28 billion people who actively login on FB, a 15% increase year over year.
As of June 2014, FB retained 802 million daily users, or those who log onto FB daily. Per Street Insider, FB’s unique users in July increased by 1.3%, and the average FB user spend 38.10 minutes/day on the site, which translates to a 4.5% increase from June’s statistic.
From the aforementioned facts and figures, one should see that FB is still burgeoning, and Zuckerberg’s refusal to sell the company to technology and computer giants before the IPO, including to Yahoo (YHOO - Analyst Report), Google (GOOGL - Analyst Report), and Microsoft Corporation (MSFT - Analyst Report), indicates how he still has aggressive plans for FB.
The social media mogul has been nominated by a host of tech experts to be the next Google, but faces stiff competition from giant e-commerce retailer, Amazon Inc. (AMZN), a company that many also believe could fill that role (see Which Social Media Stock is Best for Your Portfolio?).
Coincidentally, Zuckerberg has been the one seeking to make acquisitions as of late. The most famous of his acquisition spree include the recent WhatsApp purchase for $16 billion cash, and $3 billion in stock.
There is no doubt that Zuckerberg sees WhatsApp as a powerful gateway to help FB grow in the international community as most of WhatsApp’s users are not American youth, but young people in other countries. There have been a host of other purchases and many believe that these acquisitions, if integrated correctly, could help keep FB in a dominant position.
Many traders and investors argue that FB is also a great growth stock, as it holds the potential to continue growing at a solid pace, especially after seeing how the social media king crushed estimates. FB saw EPS increase by about 957.1% from last year, while an analyst at Cantor Fitzgerald, reiterated a price target of $82/share for FB.
FB holds a Zacks Rank #2 (Buy) and has been looking very positive from its previous conference call. FB managed to make $2.910 billion in sales last quarter, with a whopping net income of $791.00 million. FB had 2,615 million average shares trading, and had a diluted net EPS of $0.30/share.
FB surprised positively and beat the Zacks Consensus EPS estimate last quarter by 15.38%, and shares climbed after the earnings report. It is also worth mentioning how EPS expectations have been revised and increased in the past month suggesting more growth could be ahead for FB’s stock, and that it might make for a solid addition to any portfolio.
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