Facebook Inc (FB) Stock Remains Volatile Due To Unstable Traffic Trends


According to U.S. ComScore data, there has been an accelerated declining usage trends in Facebook Inc (NASDAQ:FB)’s user base. The data shows that average time spent is down 12 percent in August. Apart from this, the data also highlights a underlying demographic shift occurring within Facebook’s user base. The latest data shows that users with age 55 and above are Facebook Inc (NASDAQ:FB)’s fastest growing audience segment. Meanwhile, the major targeted age by the company i.e. users with age groups 12-17 and 18-24, have shown a significant decline of 42 percent and 25 percent respectively.

 Facebook Inc (FB) Stock Remains Volatile Due To Unstable Traffic Trends

Such declining trends can be attributed to more time spent by users on mobile devices and smartphones. Facebook Inc (NASDAQ:FB) has been experiencing steep desktop declines vs. the broader web; therefore growth in mobile engagement fits with the data from comScore. As per a research report from Evercore Partners, Facebook Inc (NASDAQ:FB)’s desktop declines and inability to “find growth in mobile engagement to be just in line, relative to peers, such as Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL), suggesting share loss in time spent, when consolidated for desktop and mobile.” The report, like many others, is of the opinion that tapping mobile users is a very good option for Facebook Inc (NASDAQ:FB). The report, to back their opinion, cites an example of a small start-up, Twenty.me, which is introducing in-text mobile search within group conversation, an area of “unique opportunity for Facebook to explore, which seeks to introduce search aspects into its mobile service in a more seamless way.”

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The report from Evercore Partners considers that the US market, which contributes a majority of revenues for Facebook Inc (NASDAQ:FB), has almost saturated for the social network, and expects the future growth to come from “continued international user growth, higher desktop ARPU (average revenue per user), and mobile advertising.” Backed by such findings, the report forecasts that Facebook’s revenue will increase by 21 percent CAGR i.e. from $4.9 billion in 2012 to $15.2 billion by 2018, and mobile revenue’s contribution to the total will also increase; “we expect mobile to reach more than half of total revenues by 2018, or 52%, up from 6% in 2012 (or ~$300 million).”

The EverCore partners expect the Facebook Inc (NASDAQ:FB) stock to remain volatile, despite sliding by 50 percent since IPO. The volatility will remain until “U.S. traffic trends show signs of stability or more tangible signs of mobile progress become clear.” Also contributing to the volatility will be the November Lock-up expiration, which will unlock around 750 million shares.

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