Facebook Inc (NASDAQ:FB) has been moving toward mobile. The move is one of the most positive indicators for the social networking company and it has formed the impetus for the near doubling of the company’s stock price so far in 2013. Citigroup analyst Mark May reckons the company’s mobile monetization is doing incredibly well and the firm’s mobile revenue per user should exceed per user desktop revenue in the fourth quarter.
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The chart above shows a comparison in ad revenue per monthly average user on desktop and mobile for Facebook Inc (NASDAQ:FB). The inflection point came in the last quarter that Facebook reported and the growth in per user mobile ad revenue is likely to continue outstripping desktop growth.
Facebook goes mobile
Last year when the market was bearish on Facebook Inc (NASDAQ:FB) stock, analysts pointed to the lack of mobile revenue at the company. That trend has now been reversed. According to Mr. May’s projections, mobile ad revenue per user will be greater than desktop by the end of the year. The mobile revolution has been capitalized on by Facebook, and that’s the greatest asset the company has.
Facebook has been innovative with the way it implements ads on mobile and it has managed to do so without negatively hitting user engagement. The company is now trading at more than $50 per share, with a P/E of close to 200. Investors are expecting Facebook Inc (NASDAQ:FB) to grow mobile revenue massively in the quarters ahead, and May’s report supports that view.
Facebook is fast becoming a mobile social network. As PC sales around the world slump and mobile sales make up for the lack, that’s an incredibly positive trend. The massive valuation of the company’s stock may have a great deal of the expected growth already priced in, however.
Facebook valuation hits bubble territory
The high valuation of stock has made some suggest that the firm’s value has hit bubble territory. Certain technology stocks have added huge amounts of value in 2013, buoyed by Federal Reserve policy and a search for big returns. The trend may have led to an unsustainable valuation on Facebook Inc. (NASDAQ:FB) stock.
Whether or not Facebook Inc. (NASDAQ:FB) stock is overvalued at current levels is difficult to answer. Facebook is doing incredibly well, but that does not justify its valuation for some investors.