Facebook delivered 18% growth of monthly active users (MAU) in its most recent quarterly earnings report — no mean feat for a company its size. But the real stunner was the growth of its mobile MAU, which soared by 45% in a year and hit 874 million in September. Mobile ad revenue is now 49% of the company’s total ad revenue. Even though Facebook’s share price has soared from below $20 to $50 in a year, the stock rocketed up by another 15% in the after hours trading as investors reacted to the numbers. The implications are clear: Facebook is about to become a mobile software company.
Facebook is thus repeating the pattern of a couple of other big-cap super tech stocks that have outperformed Nasdaq handily over the past year, such as Netflix. These giants are utterly dominant in their sectors and apparently on the verge of exploiting new growth areas.
One impact of Facebook’s dazzling mobile ad revenue growth will no doubt be an increased interest in mobile messaging apps like LINE, WhatsApp, BBM, Kik and Tango. LINE is prepping for its IPO in Japan and the public listing could trigger a veritable mania in Tokyo, where mobile app companies like GungHo and Colopl have been on a tear in recent months.
Facebook’s mobile ad strength will fuel expectations for strong mobile ad growth of messaging apps, which are now starting to mimic Facebook as game, music, photo and video distribution platforms. BBM’s ability to rack up 20 million iOS/Android downloads in a week indicates that BlackBerry has a shot at making it to the big leagues in the messaging app battles, perhaps hitting 40 million to 50 million new users by the end of the year.
The year 2014 will be defined by the attempts of messaging apps to replicate Facebook’s mobile ad success and could even lead to an overdue merger and acquisition wave as companies who missed the messaging craze will be forced to buy their way into the industry. It would not be a surprise to see Google, Twitter or Yahoo make a dramatic acquisition sooner rather than later.