Tomahawk, WI 7/30/2013 (Basicsmedia) – It is often considered beneficial to investors to find out what their investments are bound to bring to them both in the long and short term. All investors love returns hence the need to explain to them if their decision to invest in Facebook Inc (NASDAQ:FB) is one that is supported or is based on their whims without hard evidence to give them the proof they need as to whether it was good or not. This article seeks to examine FB’s latest returns, stock figures and financial data as a whole to examine whether it is the right company to invest with or not.

Background Information on FB

FB operates within the technology sector, and is part of the companies which work inside the Information Technology Providers industry. Remarkably for the short time it has been in operation, it enjoys a substantial base of employees where it has currently employed more than 4,600 personnel. It is one of the major players, if not the biggest of them all, in the social media networking platform. It has continued to perform wonderfully where by December 2012, more than 1.6b users visited and used its services every month. Currently, more than 600m users visit the site daily and use it to stay in touch with their contacts.

The company’s headquarters are located in Menlo Park, California from where it has been in operation since it was incorporated in 2004.

Where Does FB’s Competition Come from?

When compared with those labeled FB’s direct competitors, which include GOOG and MSFT, the company performs quite remarkably well. It has a market capitalization of around 81.86b, compared with the 294.94b and 263.33b of both the GOOG and MSFT respectively. This is impressive but gives an indication of how much work FB still has to do in order to be classified with the bigger companies, which have been in this business for much longer period of time compared to it. FB’s revenue is 6.12b, compared against 55.80b and 77.85b of both GOOG and MSFT respectively.


Chart showing how FB’s stock has been performing in the recent past. Chart courtesy of

What Does FB Need to Do to Compete with the Best?

When the figures in the preceding paragraph are looked at, one could be tempted to say that FB is an infant when compared with the likes of GOOG and MSFT, to mention but just a few. What may not be seen or noticeable, is the fact that FB’s latest financial results shocked most analysts who were looking forward to some bad or not so impressive performance for this company. FB still obtains a large chunk of is revenues from mobile ads, and currently, it is estimated that this accounts for more than 40% of its revenues. This is a huge improvement from last year where the ads accounted for 30% of revenue.

Revenue gain rose by an impressive 53.1% to settle at around $1.8b, based purely on what FB raised from mobile ads. Analysts were of the opinion that the company would enjoy $1.6b in revenue, which would yield earnings per share of 14 cents. FB eventually managed to raise $1.8b in revenue and offer 19 cents per share. There is a belief in the market, that if FB offered to eliminate its ads at a cost, it could end up gaining more in terms of revenue, thus pushing its profits up and giving good returns to its large pool of investors.

A recent poll indicated that there is a large pool of FB loyal users who are prepared to pay monthly fees to keep their newsfeed free of all types of ads. If this was to be followed up and actually implemented by FB, it could present an extra source of revenue thus improving its financial performance as a company.  There is cause for optimism to the effect that FB still has a lot to offer in the market, which will hopefully be transferred over to the investors. In my estimation, FB offers good prospects to the investors. I even believe that FB will soon start earning more from mobile usage compared to what desktop usage.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.