Facebook Inc (NASDAQ:FB) continues to face criticism over its botched IPO, that has seen the company lose over $50 billion of its IPO value. However, according to Piper Jaffray & Co., the company still has a window of opportunity as it continues to build on its mobile ad platform.
Gene Munster, a Senior Research Analyst, and Douglas J. Clinton, a Research Analyst, claim that the company’s recent achievements in the mobile platform advertisements, which have seen it record revenues of $180 million run-rate as of June 30th, has unreasonably gone unnoticed.
According to the analysts, these statistics indicate that Facebook Inc (NASDAQ:FB) is one of the biggest players in the largely unexploited mobile advertising industry, and which according to research, is set grow immensely in the next few years. The report suggests that by the year 2015, more than $15 billion worth of mobile platform advertisements will be based in the U.S alone, thereby setting the stage for even higher revenues from this stream of income on the global scale.
Based on this, the analysts believe that Facebook Inc (NASDAQ:FB) could be set to yield approximately $2 billion per year, if the current trend is maintained. The analysts also believe that this factor has been largely left in the cold by a majority of analysts in their valuation of Facebook stock, as per the current market price.
Facebook Inc (NASDAQ:FB) which introduced sponsored results, in a bid to boost its mobile advertising campaign and has since grown its annual income projections from this avenue to approximately $180 million. Nonetheless, this comes at a point where mobile advertising revenues are believed to represent approximately 2% of Facebook’s total revenue for the year 2012, which is expected to account for 15-20% within the next 2 to 3 years, hence the $2 billion estimation.
The mobile advertising platform lags behind in the advertisement business, as exhibited by statistics from last years U.S survey, that indicated that U.S consumers spend 26% of their time online, with 22% of that being converted to Ad dollars, as compared to Mobile, whereby they only spent 10% of their time, and with an even lower Ad dollar conversion rate of just 1%.
However, according to developing statistics, this trend is likely to change as smartphones and tablets owners continue to grow. A good example is Facebook’s case, whereby in its most recent results, more than 50% of users spent more time on the mobile platform as compared to the online platform. This provoked the company’s strategy of developing its business around the mobile platform, as expressed by the company’s CEO mark Zuckerberg.
According to statistics, Facebook’s overall market share in (search, display, and other) advertising was approximately 7%. Munster and Clinton believe that if the company could maintain this percentage market share and translate it to its mobile platform, the the social networking giant could be looking at annual revenues of around $1 billion in the U.S alone. If this is scaled to the rest of the world, then there is no reason why the company should not reach the $2 billion ad revenues from mobile platform within the next two to three years.
As at the time of this writing, Facebook Inc (NASDAQ:FB) was trading at $17.63, $0.43 down, or 2.36% decline from last week’s close.