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Facebook Inc (FB): Instagram Has A Bright Future

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Facebook Inc (FB) continues its world dominance as the sun rises another day. Gizmodo has an interesting story on how the powerful Facebook Inc (NASDAQ:FB) algo works speaking to anonymous sources who worked at the tech giant, make sure to check it out, as we will be addressing other news here, which focuses on the financial aspects and the latest earnings and Mark Zuckerberg‘s latest attempt to gain even more control over his company and the world.

Facebook Inc (FB): Instagram Has A Bright Future

Sterne Agee on FB’s Instagram stats

They state (emphasis ours):

We estimate Instagram is currently growing its revenue at an annual rate of more than 100%. We consider Instagram as an important catalyst to the story and a key source of upside, going forward. We think over the next two years, Instagram revenue will account for just under 10% of Facebook’s advertising revenue, up from about 3% today. More specifically, we are projecting Instagram revenue to be close to $3B in 2017, up from ~$600M at the end of 2015. Instagram’s new ad products, which have expanded beyond just branding and now include direct response, the ability to buy ads using an API and, better tools for targeting/ measurement of ad effectiveness should continue to contribute to this step-function change in the growth trajectory. Recall, Instagram already has 400M+ active users worldwide and continues to grow rapidly (up from 30M at the time of its acquisition by Facebook in early 1H2012).

Wedbush believes Zuckerberg will continue to conquer the globe, stating:

Facebook has an insurmountable competitive advantage with over 1.6 billion monthly active users and over 1 billion daily active users, and has succeeded in convincing 3 million advertisers that its captive audience will yield returns on advertising investment. We expect Facebook to continue its rapid growth overseas, and expect it to successfully monetize its under-penetrated Instagram, WhatsApp and Messenger assets over the coming years. Investments in new initiatives position the company for long term growth, and we believe that these initiatives will drive growth over the next decade. In summary, Facebook is a great company, period.

FBN says on earnings

FB does not guide quarterly, but we estimate FQ2 revenue of $5.93B (+47% Y/Y and above consensus of $5.90B) and NG EPS of $.84 (above consensus of $.72). FB still expects NG expenses (including COGS) to grow by 45-55% Y/Y in F2016, but we think it will be at the lower-end (45% Y/Y) especially considering that this metric grew by only 41% Y/Y in FQ1.

Meanwhile, Hilliard Lyons notes:

The Facebook Inc (FB) app remains the #1 most downloaded app on all smartphone platforms in the U.S. According to comScore, the app was downloaded on 78.1% of all U.S. smartphones, the app’s highest reach. Facebook Messenger climbed to the second most downloaded app located on 63.3% of user phones, overtaking YouTube, while Instagram was ranked 9th with a 39.5% share.

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