We think its fourth-quarter results will further cement Facebook’s positioning in and growing share of digital advertising. We expect mobile advertising revenue to be up 25 percent sequentially (up 260 percent year-over-year) and to represent 52 percent of the advertising revenue mix.
The secular shift from offline to online advertising continues to be a powerful trend for companies such as Facebook. Within online advertising, the shift from desktop to mobile advertising appears to be happening at a faster pace than was expected even three or six months ago. eMarketer now forecasts U.S. mobile advertising revenue growth of 120 percent and 56 percent in 2013 and 2014, respectively, up from 99 percent and 56 percent previously. In dollar terms, the forecast calls for mobile advertising revenue of $9.6 billion and $15 billion, up from $8.54 billion and $13.3 billion in 2013 and 2014, respectively.
We believe two key drivers of results and possible upside in 2014 will be the rollout of video ads on Facebook, which could be as early as the first quarter of 2014; and more aggressive monetization of Instagram.
Bhatia and Strauser rated Facebook stock as a “buy” with a target price of $60 per share.
Readers: What do you expect out of Facebook’s fourth-quarter earnings call Wednesday?
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