Please ensure Javascript is enabled for purposes of website accessibility

The Single Most Important Number for Facebook

By John-Erik Koslosky - May 10, 2016 at 3:13PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It won't generate headlines the way stellar growth on the top and bottoms lines do, but this metric is is an important measure of Facebook's long-term success.


Let's face it: Facebook (META -0.76%) crushed it again last quarter, with revenue up a whopping 52% over the prior years and margins expanding. It also boasted daily active user growth of 16% and mobile daily active user growth of 24%.

But there was one number mentioned in the earnings call that may be the biggest indicator of long-term success:


That's the number of minutes, on average, that Facebook users spend inside the Facebook, Instagram, and Messenger apps combined every single day.  It's also a number that's up some 25% since just the summer of 2014.

Why is that so important? Because it shows that despite the growing competition for our attention -- from social apps such as Snapchat and Pinterest to original TV series -- Facebook and its core family of apps is continuing to play an increasingly larger role in our everyday lives.

The numbers over the years
In July 2013, Facebook's quarterly numbers showed that its users were on the site around 17.4 minutes a day, on average.

In July 2014, as the company pushed further into mobile and grew its Instagram platform, CEO Mark Zuckerberg told analysts that users were spending an average of 40 minutes a day in its apps, not including WhatsApp, the messaging service that's more popular abroad than here in the U.S.

In July 2015, Zuckerberg delivered an updated number for those apps: 46 minutes.

The company didn't wait until July to refresh that number this year, and probably for good reason. It's continuing to climb, and that's good news for Facebook and its investors long-term.

That's an impressive trend for an Internet business now more than a 12 years old. And it's important trend that investors in the space will want to note and watch in the coming quarters and years.

Ongoing efforts
This isn't happening by chance. Facebook has been working diligently on making its services stickier and the walls of its walled garden higher. That work includes continual tweaking of its news feed algorithms to deliver users more of what they want to see and less of what they don't.

It includes the work that has gone into establishing Facebook as a platform for video. The amount of time Americans spend watching online video doubled over the past four years. And that's likely to only grow with the development of live video platforms.

Consider what Zuckerberg had to say to BuzzFeed on the subject last month:

"We're entering this new golden age of video. I wouldn't be surprised if you fast-forward five years, and most of the content that people see on Facebook and are sharing on a day-to-day basis is video."

That ongoing work also includes Facebook's efforts to bring news publishers aboard its Instant Articles platform, dangling the carrot of widespread distribution in exchange for content that will keep users inside the Facebook walled garden. Those articles and videos should populate the continually more refined news feeds with a growing library of quality news and other content. This work is helping Facebook become more of a utility in our everyday lives.

And I'd be remiss not to mention the company's continual improvement in the quality of its advertising as still another reason people are spending more time inside its properties. Bad, ineffective ads drive people away from sites and apps. Good ones don't.

Facebook executives have been clear about that point; whether it's building your feed or designing ad platforms, the focus for the company has been on delivering a better user experience.

What this means for investors
Ultimately, the growing amount of time people are spending on Facebook apps is important to shareholders for two key reasons:

  1. The more time people are spending there, the more time Facebook has to serve them ads.
  2. The more time people are spending there, the more Facebook, Instagram, and Messenger become platforms that advertisers large and small have to push substantial portions of their budgets towards.

That should continue to translate to growing revenue for the social network, as it collects 95% of its revenue through ads, and that's good news for investors.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
$160.03 (-0.76%) $-1.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.