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Facebook’s mobile mojo sparks revenue explosion


There simply aren’t many places where investors can get 63% revenue growth, but when they find it, they pounce -- and pay up.

The example du jour is, of course, Facebook (FB) which has surged 20% to fresh all-time highs after posting fourth quarter results that blew the street away.

As my co-host Jeff Macke and I discuss in the attached video, Facebook’s growth and momentum put it in an elite class, to the point where more than a dozen analysts are scrambling today to upgrade their work in order to catch a company that is on the move.

Officially, Facebook beat bottom line estimates by four cents, but its top line surge to $2.59 billion is the source of all the buzz. To do that, the social media giant was able to show that it can indeed sell ads, while at the same time, do so on an increasingly mobile user base.

While some would argue that the stock, now worth $150 billion and bigger than Merck (MRK), is a little ahead of itself, there are several key metrics that would suggest that the company still has plenty of room to grow.

For example, last quarter Facebook did 53% of its revenue from mobile ad sales, up from 49% on Q3, but still that glass is only about half full, whereas about 80% of its monthly users are mobile.

Speaking of revenues and untapped opportunity, Facebook currently generates about $6.03 in ad sales per U.S. user, compared to just $0.84 from the rest of the world where, again, 80% of its users reside.

There’s no doubt that investors will, rightly so, continue to keep a close eye out for any signs of so-called “Facebook fatigue,” or acceleration of its self-admitted problem of retaining teenagers. In the meantime, Facebook is set to launch a brand new, highly visual, button-free/tab-free mobile application Monday.

In the meantime, there’s the stock which is forcing current and would-be investors to make a decision. Says Macke of the situation, “I wouldn’t chase it here but I wouldn’t short it either.”

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