Facebook Inc (NASDAQ:FB) is visited by millions of users each day, and for some it’s a daily routine. Facebook’s initial public offering was not a success as we know because of the mishap that happened on the Nasdaq. The final offering price for Facebook was $38 per share, bringing the valuation to around $100 billion. Many analysts weren’t happy with the valuation, because of the claim that the financials the company listed didn’t merit such a high valuation.
User growth
User growth started small in 2004, when Facebook Inc (NASDAQ:FB) was first targeting only college and high school students. Many people at that time thought that Facebook was popular enough, and that its user growth would slow down significantly. What people didn’t expect is that once it opened up to parents, friends, and others, how big it would explode and continuously grow from there.
The main growth of users didn’t take off until August of 2008, when Facebook hit 33 million users. What is amazing about Facebook is that the platform was able to keep growing users at a fast rate. To this day, Facebook Inc (NASDAQ:FB) has about one billion users signed up to the website, which it can find many ways to monetize into future revenue growth.
Earnings beat
Despite past setbacks, Facebook reported fourth-quarter earnings that beat analyst estimates. The earnings per share was at $0.17 per share compared to analyst estimates of $0.15 per share, and revenue beat at $1.59 billion compared to $1.53 billion dollars estimates. The part that Facebook was trying to elaborate on was the fact that mobile growth is important for its future.
Mobile revenue grew by 23% in the fourth quarter of 2012, compared to only 14% in the third quarter of 2012. I think that Facebook Inc (NASDAQ:FB) is making the right decision in boosting their mobile revenue and targeting mobile users now. This earnings announcement was also the first time that mobile users logging into Facebook exceeded those logging in from the desktop.
Social media survival
There are many social media companies trading in the stock market, but very few have been successful. Yelp Inc (NYSE:YELP) has been doing pretty well, trading up to about $25 per share and holding ground. Yelp allows users to review restaurants and various places people have visited, and read reviews about their experiences.
Yelp, like Facebook, also grew net revenue substantially, from 2011 to 2012 net revenue grew by 65%. Yelp Inc (NYSE:YELP) has been getting more reviews on its website, and the long-term outlook for the company is great just like Facebook Inc (NASDAQ:FB).
There is another company that has been doing well in terms of revenue growth, and that company is LinkedIn Corp (NYSE:LNKD). LinkedIn allows users to post their professional business profile, find specific groups of people, and discussion of certain topics. For the fourth quarter of 2012, LinkedIn Corp (NYSE:LNKD) had reported that from 2011 to 2012 revenue grew 81% from $168 million to $304 million. I think that Social media is still growing as a sector and could allow for tremendous gains for investors.
Future growth
Facebook has had some nice growth thus far, but the company needed to add something else to start generating more revenue. One thing Facebook Inc (NASDAQ:FB) has developed is something called graph search. Graph search allows users to search for queries or items that have been shared by their friends. I think that this will definitely help Facebook gain more growth in the future.
It can be an excellent new tool to see where your friends like to eat, what places to avoid, and other questions you would like to search for. I think that Facebook is heading in the right direction with its graph search feature, but it can do much more if it wants to.
Eventually, for future growth, they can start adding a web search feature possibly to compete against Google Inc (NASDAQ:GOOG) or they could create their own games. The point is, that with the amount of users Facebook Inc (NASDAQ:FB)has, it can find many ways to generate revenue and create wealth for investors.
The article Is This Social Media Giant Heading in the Right Direction? originally appeared on Fool.com and is written by Terry Chrisomalis.
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