Facebook Inc (FB), Google Inc (GOOG): Why This Social Networking Giant Will Continue to Grow

The other drawback, which Google Inc (NASDAQ:GOOG) is facing, is that its growth has slowed down relative to earlier periods. With a price of $885.35 coupled with slow increase in revenue, it does not seem attractive anymore. Financials show that actual sales of $14.1 billion for Google has been less than the analysts’ estimate of $14.4 billion. Actual EPS of $9.56 also missed analysts estimates by 13%.

Yahoo will also face the consequence

Financials for Yahoo! Inc. (NASDAQ:YHOO) continue to deteriorate, with a revenue decline of 7% for second quarter 2013 from second quarter 2012. Adjusted EBITDA has also decreased by 7% to $369 million on a year-over-year basis. Facebook’s surge in revenue through mobile ads will have a negative impact on Yahoo! Inc. (NASDAQ:YHOO) as the company is yet to upgrade its mobile apps to make them user-friendly and simultaneously use strategy to increase the number of mobile users.

Even with the change in management and Marissa Mayer coming in last year, Yahoo! Inc. (NASDAQ:YHOO) has not shown considerable improvement to meet investors’ expectations. Now, with the news of Mickie Rosen, entertainment executive head, resigning, the media arm of the company might also suffer a setback. The negative news is being discounted in the stock price with Yahoo! Inc. (NASDAQ:YHOO) shares falling by 4.3% to $27.86 after the announcement.

The bottom line

Facebook has proven itself as a strong competitor to these internet service providers. The company’s continuous efforts in the right direction will surely help Facebook improve its monetization and give good returns to its investors. I would suggest Facebook as a moderate buy keeping in mind the company’s strategy working in the right direction as compared to Google and Yahoo, whose performance has slowed down in recent times.

The article Why This Social Networking Giant Will Continue to Grow originally appeared on Fool.com and is written by Anjum Khan.

Anjum Khan has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google, and Yahoo!. The Motley Fool owns shares of Facebook and Google. Anjum 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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