3 Key Trends to Watch for Facebook
Facebook primarily competes with Google (NASDAQ:GOOG), Yahoo (NASDAQ:YHOO), Microsoft (NASDAQ:MSFT) and AOL (NYSE:AOL) in the display and search advertising markets. Below we highlight three key trends that will go a long way towards driving Facebook’s value in the years to come. We currently peg Facebook’s intrinsic value at $45 billion.
Better Demographic Targeting
We estimate that text and display ads are the most valuable business for Facebook, making up roughly 60% of our estimated value for the company. Facebook’s revenue per page view [RPM] declined from around $0.58 per 1,000 page views in 2006 to $0.38 per 1,000 page views in 2009. However, RPM rebounded back towards $0.45 in 2010, and we expect further growth towards $0.54 per 1,000 page views by the end of our forecast period.