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Why the top could be in for Facebook

Talking Numbers

New data show Internet ad sales growing, with mobile growing at breakneck speeds. While Facebook is gaining share in mobile, does that mean it has a bright future ahead or has the stock gone as far as it could go?

Mobile advertising is up enormously in the United States. That's good news for a company that was criticized not long ago for not having a mobile strategy – Facebook.

According to a recent report by the Internet Advertising Bureau, mobile advertising in the US is up 145% in the first half of 2013 compared to the same time last year. IAB reports that mobile advertising was $3 billion from January to the end of June compared to last year's $1.2 billion. (See the 25-page pdf report here)

What does that have to do with Facebook?

Facebook is quickly become a force in mobile internet usage but that's only after doing a lot of catching up. It was just three years ago that Facebook CEO Mark Zuckerberg dismissed developing an iPad app because the "iPad's not mobile". Then, last year, Zuckerberg admitted "we burned two years not working on mobile".

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Since that time, Facebook has built up its mobile offering and by the second quarter of 2013, mobile represented 41% of Facebook's ad revenues. As advertising were 88% of the company's $1.8 billion Q2 revenues, figure roughly $650 million in that quarter came from mobile. By year's end, mobile is projected to be 50% of the company's ad revenues.

The United States is a big factor in mobile advertising but it's not the whole market. Nonetheless, Facebook has become important globally in mobile.

Worldwide, Facebook is now the second biggest player in mobile ads, according to data from eMarketer. It is expected to have 15.8% of the planet's $16.65 billion spent on mobile ad revenues in 2013. That's still immensely behind Google's 53.2% but considering Facebook didn't even have 1% of the market two year years ago, that's a pretty big jump.

Facebook says 78% of its users are mobile, meaning 469 million mobile daily active users. About 101 million Americans are daily active user on Facebook using mobile devices.

So, with American mobile ad spending increasing and Facebook becoming more of a mobile company, does this necessarily mean good things for the social network?

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Steve Cortes, founder of Veracruz TJM, sees Facebook's long-term outlook as being dim because it may be starting to alienate its original target audience – young people.

"Other than the fact that [the stock] is expensive, is the fact that young people are increasingly gravitating away from Facebook," says Cortes. "If you talk to people in their teens and twenties, they view Facebook as something for old people."

Andrew Busch, author and publisher of The Busch Update, doesn't think Facebook has all that great of an upside ahead for it.

"When I see these kinds of patterns, I'm not a big fan of Facebook," says Busch. However, Busch sees a possible trading range for the stock for those wishing to trade in and out of the stock.

To see the rest of Cortes' fundamental analysis and the technical levels Busch says traders should know, watch the video above.

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