Microsoft ( MSFT) - via Bing and LinkedIn.Īccording to eMarketer, Facebook controlled approximately 19.3% of the online advertising market in 2020.That may change as hardware products like Oculus and subscription services like Bulletin grow, but for now, it's a fact.įacebook's main competitors in the online advertising industry include: Over 90% of its revenue comes from online ads. So, we need to look at the competitive pressures FB faces before we can really say it's a good investment.įacebook is mainly in the online advertising industry. But of course, competitive pressures could prevent a firm in a growth industry from gaining market share, resulting in it lagging industry growth. That would tend to imply that online ad businesses like Facebook have a rosy future. Online advertising - Facebook's bread and butter - is an obvious growth industry expected to grow at 17% CAGR to 2027. To assess Facebook's future earnings potential, it helps to look at the competitive environment it operates in. In this article, I will outline a bullish thesis on Facebook stock, arguing that it could easily hit $700 provided that a sector-wide correction doesn't hit tech stocks in the next few years. There's no particular reason that can't happen. If Facebook continues growing revenue at 28% annualized, then it should match Microsoft's $159 billion about two years into the future. Microsoft's revenue for the trailing 12-month period was $159 billion, while Facebook's was $94 billion. That might sound like a far-fetched scenario, but consider this: Apple ( AAPL ) and Microsoft ( MSFT ) both have market caps in excess of $2 trillion right now.
If the stock went to $700, it would have a $2 trillion market cap. As of this writing, it had a $1.01 trillion market cap. After having its FTC lawsuit dismissed, it rocketed up to $355 - an all-time high.
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