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Apple Inc. (AAPL) and Facebook Inc (FB): Contrasting Fortunes?

Upwardly mobile

Facebook Inc (NASDAQ:FB) reported 819 million mobile monthly active users — a 51% increase year-on-year and over the 751 million reported in the first quarter. The company translated this into increased mobile advertising revenue, which accounted for 41% of the total ad revenues ($1.6 billion), up from the first quarter when it was only 30%.

What’s made mobile advertising so lucrative for Facebook Inc (NASDAQ:FB)? For one, advertisers like the ability to insert their ads into Newsfeeds, and early results seem to indicate these are more effective than traditional display ads. Also, local small businesses seem to have realized that Facebook users are increasingly on the mobile and they better take advantage of the SoLoMo (Social-Local-Mobile) behavior.

Google’s cautionary tale

Facebook Inc (NASDAQ:FB) is still be dwarfed by Google Inc (NASDAQ:GOOG)’s approximately $9 billion mobile ad revenue. However, Google’s own problems were underlined in its poor third quarter results where it missed Street expectations on earnings and revenue. Analysts are worried about Google’s steadily falling cost-per-click numbers, which many are attributing to most of these clicks increasingly coming from mobile users where ad pricing across the board is lower than for the conventional web. With Facebook’s growth coming from mobile users, will it run into a similar problem?

Despite their contrasting fortunes, both Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB) are sitting on lots of cash, still trading off their highs, and the underlying fundamentals look good. That’s a Buy in anyone’s book!

The article Apple and Facebook: Contrasting Fortunes? originally appeared on and is written by Preetam Kaushik.

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

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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