In Mobile, Here's What Facebook Is Up Against

The iPhone 5 launch on Wednesday, Sept. 12, is sure to be the most important event for tech investors this year. The Motley Fool will be hosting a live chat where our top tech analysts will answer your questions and break down what the announcement means for Apple and tech investors everywhere. Be sure to swing by at 12:45 p.m. ET this Wednesday for all your coverage of Apple's next big announcement.

From a standing start in 2011, when neither company generated any revenue from its mobile platform, Twitter will generate more revenue than Facebook (Nasdaq: FB  ) this year, according to eMarketer. And while the digital marketing research firm expects Facebook to be competitive in the mobile display segment, taking the leading market share next year, it's difficult to see how the social network's current business model and prospects come anywhere near supporting the stock's valuation.

Let's look at eMarketer's estimates for mobile display ad revenue market share through 2014.





Facebook 6.6% 19.5% 20.5%
Google (Nasdaq: GOOG  ) 18.4% 17.5% 17.6%
Pandora (Nasdaq: P  ) 20.5% 17.6% 16.3%
Twitter 11.7% 13.8% 14.5%
Apple* (Nasdaq: AAPL  ) 6.8% 5.2% 4.8%
Other 36% 26.4% 26.4%

Source: eMarketer, September 2012.

Looking at the whole pie
The trouble is that mobile display ads are just part of the mobile-revenue pie -- 38% last year. In 2012, search will account for roughly half of all mobile-ad revenue, and that's a segment that Google dominates, with 95% market share. eMarketer expects search's contribution to total mobile revenue and Google's dominance of the former to remain constant over the next several years. As a result, this is how the forecasts for total mobile-revenue market share play out over the next few years:  





Google 54.5% 54.1% 54.1%
Facebook 3.2% 8.8% 9.5%
Pandora 8.7% 7.9% 7.5%
Twitter 5% 6.2% 6.7%
Apple* 2.9% 2.3% 2.2%
Other 26.2% 20.7% 19.9%

Source: eMarketer, September 2012.

These numbers don't add up
Finally, the pie isn't all that large to begin with in dollar terms -- an estimated $6.6 billion by 2014 -- so Facebook's 10% market share by 2014 wouldn't amount to needle-moving revenues, much less profits. eMarketer estimates that Facebook will generate $629.4 million in mobile revenue in 2014. For a company that's hanging its strategic hat on the transition to mobile and still sports a market capitalization in excess of $40 billion, that's a rounding error.

All the same, one of The Motley Fool's top analysts believes there's a lot more to this company than meets the eye, so read up on whether there is anything to "like" about it today, and we'll tell you whether we think Facebook deserves a place in your portfolio. Access your report.

Fool contributor Alex Dumortier holds no position in any company mentioned. Check out his holdings and a short bio; you can follow him on Twitter, @longrunreturns. The Motley Fool owns shares of Apple and Facebook. Motley Fool newsletter services have recommended buying shares of Facebook, Apple, and Google and creating a bull call spread position in Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2012241, ~/Articles/ArticleHandler.aspx, 10/21/2016 8:29:14 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
AAPL $116.60 Down -0.46 -0.39%
Apple CAPS Rating: ****
FB $132.07 Up +2.07 +1.59%
Facebook CAPS Rating: ***
GOOGL $824.06 Up +2.43 +0.30%
Alphabet (A shares… CAPS Rating: *****