Facebook is right on the verge of going public and the whole thing is expected to bring huge loads of cash to the social network. While the company announced the range of its stock and is expected to land between $28 and $35, an analyst from Sterne Agee has now stated that within a year of going public, Facebook may hit $46.
This has been speculated by Arvind Bhatia, who is an analyst with Sterne Agee. According to Bhatia, he has based this rather high opinion of Facebook’s expected stock performance on a number of factors. For instance, Facebook is expected to attract millions of more users so much so that, he expects, that the overall user base of the social network will go from 900 million to 1.5 billion!
In his analysis, he wrote, “Our estimates would be achievable if Facebook increases its share of online advertising by only 300 basis points from 5 percent in 2011 to close to 8 percent by 2016. In addition, we have very little contribution from mobile and China modeled currently and as such our estimates could prove conservative. Together, Mobile and China could add $1.5B in incremental revenue and $600 million in incremental EBITDA by 2015.”
Bhatia pins great hopes on Facebook’s ability to become central to the online ad industry. Poised right at the heart of the social media, Facebook can make great use of this position to grab a greater share of the online ad revenue, he thinks, “We believe Facebook is in the early innings of revolutionizing the $600 billion worldwide advertising market, particularly the sub-segment of online advertising.”
Bhatia further estimates that by 2016, Facebook will be able to raise its overall revenue to a whopping $11.4 billion with net income reaching $4 billion.
Source: Sterne Agee