Facebook (NASDAQ: FB) shares increased this year from $54 in early January to approximately $80 on December 29th. The social media giant continued to expand in 2014 by buying the messaging application WhatsApp for $19 billion. Additionally, Facebook saw significant user increases in Instagram, a photo-sharing social platform that Facebook acquired for $1 billion in 2012. Instagram has yet to significantly contribute to Facebook’s bottom line, but there is high potential for advertising revenue as the application has over 300 million monthly active users.
In 2014, Facebook saw large growth in mobile use and revenue, breaking $3 billion in the third quarter. However, the rate of acquiring new users began to slow. Some argued that this is inevitable as Facebook becomes more and more widespread, while others fear that teens are shying away from the website in favor of other social media platforms.
Overall, analysts remain bullish on Facebook heading into 2015. Analyst Betsy Van Hees of Wedbush maintained an Outperform rating on FB with a $90 price target on December 29th. Van Hees highlighted Facebook’s advertising potential, noting “Facebook is well positioned to rapidly gain share in the online advertising market given their user base scale, superior data, and cross-platform targeting capabilities.” She also believes that Facebook shares will increase in the near-term thanks to “the core mobile newsfeed ads and improved right rail desktop ads.” In the long term, Van Hees noted “Instagram monetization and WhatsApp” as large revenue opportunities.
Betsy Van Hees has a 74% overall success rate recommending stocks and a +21.2% average return per recommendation.
Separately on December 16th, analyst Doug Anmuth of J.P. Morgan reiterated an Overweight rating on FB with an $85 price target. Anmuth noted that Facebook’s “engagement metrics across mobile and desktop remain strong.” The analyst also commented that Facebook’s “mobile and desktop data, which shows Facebook’s share of overall Internet time, improved M/M to 16.9 percent.”
Doug Anmuth has a 68% overall success rate recommending stocks with a +27.3% average return per recommendation. Specifically, he has rated Facebook 34 times with a 91% success rate recommending the stock.
In addition, analyst Mark May of Citigroup reiterated a Buy rating on Facebook on December 19th and raised his price target from $86 to $91. May was impressed by Instagram’s revenue potential, noting “While Instagram is still early in monetizing its audience and data assets and its financial contribution to FB is minimal today, we believe that it is quickly gaining monetization traction.” May stated that thanks to fast user growth, Instagram is now worth $35 billion, up from a previous estimate of $19 billion.
Mark May has a 62% overall success rate recommending stocks with an average return of +12.9% per recommendation.
Facebook impressed analysts with targeted advertisements, and Wall Street is eager to see the same tactic on Instagram. What does Facebook have in store for 2015?
Overall, the top analyst consensus for Facebook on TipRanks is Strong Buy