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3 things Facebook needs most

Talking Numbers

Lou Kerner, founder of the Social Internet Fund, says there are three things which can revive Facebook’s flagging stock.

Since going public in May 2012, Facebook has done nothing but broken the hearts of its investors. Shares are down close to 32% since its IPO and they’re down 7% just this year alone.

As the company reports its earnings today, what will help jumpstart Facebook’s stock?

We talk numbers with Lou Kerner, Founder of the Social Internet Fund. He has invested in such companies as Klout and Meetup. Before that, he was at Wedbush and Goldman Sachs. Kerner says there are three things which can revive Facebook’s flagging stock.

1. Mobile revenues above $500 million
Kerner says: “We’re in the middle of a mobile revolution. Facebook needs to prove that it’s at the center of that revolution. That means they need to drive significant mobile revenue growth. If they can show a number above $500 million in mobile revenue in the quarter, that will really surprise a lot of folks and help drive the stock higher.

2. 60% active daily/monthly users
Kerner says: “They need to continue to show that engagement is growing. The major engagement metric for Facebook is the percentage of daily active as a percentage of monthly active users. If that number can be above 60%, then I think you’re going to see happy investors.”

3. Average revenue per user: $2.90 or above
Kerner says: “Another metric folks look at is average revenue per user (“ARPU”). If that number continues to grow and goes beyond $2.90 in the quarter, then I think investors are going to reward Facebook and push the shares higher.”

Is Kerner right? Feel free to discuss in the comments below.

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