We all know the pivotal role Facebook Inc. (NASDAQ:FB) played in Arab Spring. The latest political turmoil in Egypt has been unfolding on the social networking site. Many of the important messages were spread through Facebook. The Egyptian military posted its 48-hour ultimatum on its official page on the social networking site, while the "vision" of ousted president Morsi was shared on his own official page.
Growth In Developed World More Important For Investors
Rolfe Winkler of the Wall Street Journal says that social networking dominates the Internet in developing nations even more than it does in the United States. But that doesn't interest investors. Though Egypt and many other developing countries have a highly engaged Facebook audience, there is little advertising market. So, investors and analysts are not only track how rapidly the Menlo Park-based company's audience is growing, but also where the increasing number of users come from.
As of March 31, Facebook Inc. (NASDAQ:FB) has 1.1 billion users globally, a growth of 23 percent from the previous year. That's impressive. But the United States and Canada saw only a 7 percent increase in Facebook users. Winkler says that the U.S. and Canada accounted for 30 percent of Facebook Inc. (NASDAQ:FB)'s total user base at the beginning of 2010. The "rest of the world" category in the image below, which includes Middle East, Africa and Latin America, made up just 19 percent of the company's user base. But the proportion changed entirely by the first quarter of 2013 when the U.S. and Canada accounted for just 18 percent while "rest of the world" category grew to 29 percent.
Facebook ARPU From Emerging Markets Too Low
However, advertisers readily pay higher amounts for eyeballs in developed countries. As a result, the average revenue per user (ARPU) in the United States and Canada stood at $3.50 in Q1 of 2013. That's seven times higher than 50 cents of ARPU in the "rest of the world" category.
Of course, the rising number of users in developing countries is important for Facebook Inc. (NASDAQ:FB), and ARPU in those regions is expected to grow slowly. But investors should focus more on growth in North America or other developed economies. That's simply because it will take years before users in "rest of the world" become huge contributors to Facebook Inc. (NASDAQ:FB)'s bottom line.
Facebook Inc. (NASDAQ:FB) shares were down 0.62 percent to $24.37 at 1:05 PM EDT.