India has overtaken the U.S. to become the world’s largest Facebook, Inc. (FB - Free Report) audience with a total of 241 million active users as of Jul 13, compared with 240 million in the U.S., according to The Next Web. Further, the portal suggests that New Delhi tops the list of Indian cities with 15 million users on the Facebook platform.
It is worth mentioning that back in Jan 2015, a report by a market research firm eMarketer, anticipated India to surpass the U.S. and lead the global Facebook user base on mobile by 2017.
Recently, Facebook announced that it has achieved two billion monthly users worldwide. This has been a major reason behind the company’s share price growth of 36.3% during the past 12 months – outperforming the S&P 500 Index’s composite market growth of 13.1%.
We also note that the company has outperformed the Zacks categorized Internet - Services industry’s gain of 22.6% in the last one year.
India Presents Tremendous Growth Opportunity
India – the world's second most populated country – has over 1.2 billion people, of which only a little over 460 million (only 36%) use Internet. Despite this low Internet penetration and an unfavorable gender bias (75% of active profiles are male) the country has been prolific in terms of active Facebook usage.
This massive user growth is primarily attributable to a burgeoning well-educated middle class and a large youth population, coupled with rapid adoption of internet-enabled smartphones in India. Notably, users below the age of 25 constituted more than half of India’s total Facebook audience.
Reportedly, the latest figures that Facebook released to advertisers indicate that “active users in India are growing more than twice as fast as in the U.S.” While Indian active users grew by 27% in the past six months, the U.S. witnessed only a 12% increase over the same period.
Mobile Users: Key Catalyst
Notably, India’s mobile Facebook users represented 84% of its total 241 million Facebook users. We note that mobile has been the key growth driver in Facebook’s advertising business, with mobile advertising revenue representing approximately 85% of advertising revenue for the company’s last reported quarter.
At present, Facebook carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in this industry include Bridgeline Digital, Inc. (BLIN - Free Report) , Yirendai Ltd. (YRD - Free Report) and Autohome Inc. (ATHM - Free Report) . Bridgeline Digital and Yirendai both sport a Zacks Rank #1 (Strong Buy), while Autohome carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank Stocks here.
Bridgeline Digital, Yirendai and Autohome have delivered average positive earnings surprises of 14.55%, 1,043.42%, and 41.38% in the trailing four quarters respectively.
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