Facebook Inc (FB): Three Charts That Explain Why This Internet Giant Can Rise

Mobile monetization has been one of the major concerns that have spooked Facebook investors. In addition to worries about monetization, there are also concerns that rival social networks like Tumblr, Twitter, and Snapchat are more attractive to mobile users. However, the chart above shows that Facebook’s Mobile momentum is very strong; Mobile MAUs grew 54% year-on-year for the most recent quarter. Moreover, Facebook is making more and more money form mobile advertising.

Facebook’s first-quarter results showed that its mobile advertising revenue grew 23% sequentially to $375 million, which represented 30% of Facebook’s total advertising revenue. With FBX ads still to come to mobile, there is still huge potential for future revenue growth over here.

Speaking of mobile, rival Yahoo! Inc. (NASDAQ:YHOO) just beat Facebook to acquire Tumblr, the photo-blog based social network for $1.1 billion. Whilst Tumblr would have been a great acquisition for Facebook Inc (NASDAQ:FB), I think that Yahoo! Inc. (NASDAQ:YHOO) just wanted it a bit more, and was willing to pay the premium price. Tumblr’s acquisition will give Yahoo! access to a young audience that is glued to mobile, and will help remove the stigma of Yahoo! Inc. (NASDAQ:YHOO) being “old school.” However, I believe that Facebook made the much better choice in acquiring Instagram for $1 billion, which can be a strong driver of Facebook’s mobile growth in the future.

A Fool’s opinion

Facebook Inc (NASDAQ:FB) was clearly overvalued at the time of its IPO because there were a lot of uncertainties around its future strategy and its ability to make money from mobile. However, the strength in the company’s underlying metrics since its IPO has proved many doubters wrong. With reduced execution risks and strong potential for revenue growth going forward, I consider Facebook good buy.

The article 3 Charts That Explain Why This Internet Giant Can Rise originally appeared on Fool.com and is written by Zain Zafar.

Zain Zafar has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google. Zain is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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