Market Overview

Concerned About Facebook's Ad Revenue Growth Slowing Down? This Analyst Says You Shouldn't Be


Although Facebook Inc (NASDAQ: FB) reported second-quarter numbers above expectations, investors sent the company's shares lower on Thursday fearing increase in expenses and slower growth in ad revenue going forward.

According to James Cakmak, ‎Internet Equity Research Analyst at Monness Crespi Hardt, the fears regarding growth in ad revenue slowing are overblown. Cakmak was on CNBC to explain why.

All Good News

"Investors initially were focused, perhaps a little bit spooked, on the fact that the CFO noted that the growth would slow in the back half of this year due to the law of large numbers as well as FX headwinds," Cakmak began. "But in reality if you look at the constant currency growth, it was up 50 percent this quarter. "

He continued, "That's faster than the 49 percent in Q1 and ad revenue in constant currency is growing 55 percent. No other company in the ad space is posting these kind of growth off of this kind of base.

"So, really the fact that they are able to grow this fast along with the fact that despite the investments the margin actually went up over Q1, I think it was good news all around for Facebook."

Best Positioned For Growth In Mobile

Cakmak highlighted how mobile is going to be the growth driver for Facebook, saying, "The future is brand advertising. Where is it going to be? It's going to be on mobile. Eighty-nine percent of their users are on mobile, 76 percent of their ad dollars are on mobile and what companies in the world are best positioned for mobile and really Facebook, you can easily put that at the top of the heap."

Latest Ratings for FB

Nov 2019UpgradesOutperformBuy
Oct 2019MaintainsHold
Oct 2019MaintainsOverweight

View More Analyst Ratings for FB
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Posted-In: CNBC James Cakmak Monness Crespi HardtAnalyst Color Analyst Ratings Tech Media


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