Wall Street thinks Facebook stock will rise 20% by next year

The company is currently seeing its revenue growth accelerate year-over-year

Financial trends and news by Steven Loeb
August 22, 2016 | Comments
Short URL: http://vator.tv/n/46e1

While we watch Twitter struggle mightly lately, as its stock sinks down to new lows, it's instructive to look at Facebook as a reminder that a social media can succeed as a public company, if the company figures out how to keep growing, especially on mobile.

The fact that Facebook's numbers are actually growing at a higher rate than they were last year is just one reason that Wall Street analysts are predicting that it's stock will grow another 20 percent in the next year, according to a report out from Barron's over the weekend. 

If it does go uo another 20 percent would bring the price up to $153 a share; however, would actually be a slow down; the company ended trading at $123.56 a share on Friday, up 30 percent from $95.31 on the same day in 2015. 

Facebook's stock is currently up 18.06 percent from the beginning of this year. 

Part of Facebook's continued growth in its stock price has to do with the fact that it's actually growing revenue faster now than it was last year. Revenue rose by 56 percent in the first half of this year, compared to the first half of 2015. That's actually up from the 40 percent it grew from the first half of 2014. It's also been beating expectations by more than it had been, 22 percent this year, compared to 5 percent last year.

Facebook's revenue comes from ads, and there is some concern that the company could reach a saturation point. The thing that could potentially save it is its other successful properties, including Messenger and WhatsApp, where there is still a lot more room.

If it does that, then it could grow its daily average users, which are currently 1.1 billion, to 1.7 billion, an increase of 55 percent, by 2020. 

Another area where investors are a little skittish are young users, particularly those under 25, but the data suggests that that problem may be overblown.

Facebook does have a problem hooking in new users. A report from comScore earlier this year broke down the percentage of users on each social network by age group. Only 16.5 percent of Facebook's users were 18 to 24, tied with Pinterest for the second-smallest percentage. Only LinkedIn was lower with 15.5 percent.

In the next age group, 25 to 34 years old, Facebook actually came in last, with 20.3 percent.

The big winner in both of those age groups was Snapchat, with nearly half, a whopping 46.8 percent, of its users in the youngest bracket, and another 29.2 percent in the next highest. 

Adding up the two age brackets, Facebook has 36.8 percent of its audience aged 18 to 35. On Pinterest and Twitter that's 40.4 percent, and on Snapchat it's a whopping 76 percent Millenial audience. 

For the 18 to 24 year olds, Snapchat has a 64 percent reach, meaning that is the percent that has the Snapchat app on their phone, up from 24 percent in early 2013. Among the 25 to 34 year olds, it's 31 percent. After that it falls off a cliff, at just 8 percent. 

However, Facebook has one big advantage: the amount of time spent on the app, especially among young people. Those aged 18 to 34 spend close to nearly 1,000 minutes per visitor, per month, on Facebook. Only two other networks even reach 200 minutes: Snapchat and Instagram. LinkedIn and Vine seem perilously close to zero.  

So, while Facebook has trouble getting young people on, when they do, its the he network that they spend far and way, tthe most time on. More time means they are seeing more ads, and that will only help Facebook's revenue numbers. 

VatorNews reached out to Facebook for comment on this report. We will update this story if we learn more. 

(Image source: theconversation.com)

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