Facebook Inc.'s (FB, Financial) upward momentum started in mid-2012 and the stock is still inching higher. It was a profitable year for the social media giant in 2016 and the stock was up nearly 10%. Moreover, it is off to an amazing start this year. By initiating a position in Facebook, stockholders receive an industry leader, a lucrative and robust business model and long-lasting competitive benefits.
In the most recent quarter, the company managed to beat earnings and revenue estimates by a wide margin. The company’s revenue surged slightly over 55% year over year. Although there are a large number of social networks, none have been able to slow down Facebook's growth.
The social network has endured to add large numers of new active users with each passing quarter and the trend will likely continue in the imminent quarters. As of third-quarter 2016 results, the company had 1.79 billion monthly active users.
The company’s third-quarter monthly active users surged 4.4% sequentially compared to 3.5% growth in the second quarter. This clearly suggests the company’s user growth is not displaying any signs of slowing down.
If this kind of growth continues, Facebook will soon reach its target of two billion monthly active users. The company’s long-term goal is to achieve approximately 5 billion monthly active users by 2030.
Facebook was the first social network to exceed one billion registered accounts and currently has the most monthly active users. It is followed by WhatsApp and Facebook Messenger, which are affiliated with the company.
After Facebook Messenger are QQ and WeChat with approximately half of Facebook’s monthly active users. If any of Facebook’s rivals ever begin to snatch significant portions of users from the company, the cost of upholding its leading position could surge, negatively impacting its profit margins.
In recent years however, Facebook has become a very popular social networking platform and it would not be easy for any of its rivals to dislodge it from its leading position.
The company's productive advertising platform provides it with sufficient amounts of cash, which allows the company to avoid taking on debt to fund its operations, making it a strong player in the social networking industry.
Summing up
Facebook is growing steadily with each passing year and will continue growing at a stable rate in the imminent years. The social network giant’s ability to increase its user base at a rapid rate highlights its expertise in appealing to and engaging its users.
Therefore, investors should continue to hold the stock for more gains in the upcoming years.
Disclosure: No position in the stocks mentioned in this article.
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