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Former Hedge Fund Manager: Facebook's Monetization Is More Important Than User Growth

Former Hedge Fund Manager: Facebook's Monetization Is More Important Than User Growth
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Many Facebook Inc (NASDAQ: FB) investors will be watching for an increase in DAUs (daily active users) and MAUs (monthly active users) this quarter. Former hedge fund manager Cody Willard thinks investors should focus on something else instead.

"Facebook's penetration in the developed world is so high at this point," Willard, who now serves as the chairman of Scutify (a financial social network), told Benzinga. "Three quarters of the adult population in the developed world is on Facebook. The growth has to come from monetization of those users -- not from new users."

That, he said, is what people really want to see from Facebook.

"They want to make sure that we are very early on in the monetization potential of the billion-plus people that use Facebook," Willard added.

Related Link: Facebook Vs. Twitter: Who Will Win The Battle For Sports Video?

'New Threats'

Twitter Inc (NYSE: TWTR) is often cited as the biggest threat to the Facebook empire, but it may not be the most significant competitor.

"There are constantly startups, new threats, new companies…that are hitting critical mass," said Willard.

Facebook famously quashed a potential competitor when it paid well over $10 billion for WhatsApp. The company tried to do the same when it made an offer to acquire Snapchat.

Willard said that Facebook has certainly hit a "critical mass as the centralized place for people to meet and store their personal lives," but that doesn't mean consumers won't use other social networks.

"You watch 100 different TV shows in a year on 30 different TV stations on five different form factors," Willard concluded. "In five years, you'll be on five different types of social networks that you access from 30 different form factors. The size of the social network pie is growing tremendously."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Latest Ratings for FB

Mar 2017BTIG ResearchUpgradesNeutralBuy
Feb 2017Pivotal ResearchDowngradesBuyHold
Jan 2017Pacific CrestReinstatesOverweight

View More Analyst Ratings for FB
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Posted-In: Cody Willard Scutify twitterAnalyst Color Exclusives Analyst Ratings Tech Best of Benzinga


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