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4 Major Facebook Growth Challenges

By The Street

Facebook (FB) may be gearing up for the mother of all tech IPOs, but big questions are being asked about the company's long-term growth strategy.

From Mark Zuckerberg's Harvard dorm room to a potential market cap of $104 billion, Facebook has enjoyed a meteoric rise in the space of just eight years. Experts, however, warn that the Facebook CEO faces a massive challenge ensuring that this upward trajectory continues.

"While Facebook has done a fantastic job of gathering hundreds of millions of users together between its virtual covers, monetizing that huge crowd has been more of a challenge," noted Charles King, principal analyst at research firm Pund-IT. "There may simply be no easy way for Facebook to ensure long-term growth, especially at a level commensurate with what's likely to be its huge initial valuation."

For the boy king Zuckerberg and his court, driving long-term revenue growth will be the biggest test of the post-IPO era. From mobile to developers and cultural challenges, analysts predict plenty for the Facebook CEO to tackle.

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Monetize Mobile

Working out how to monetize mobile will be crucial, warns Jeff Sica, chief investment officer of Sica Wealth Management.

"To ensure long-term growth, Facebook needs to generate more revenue from mobile users who represent the largest percentage of growth," he explained, in an email to TheStreet. "In order to achieve this revenue, they must increase the time mobile users spend online to justify higher advertising fees. They must also shrink ad size for mobile users to increase the number of users."

"Facebook needs to make a full-scale effort in further monetizing not only the site's advertising revenue opportunities, but a major bang for their buck is to do the same in monetizing advertising revenues on the mobile side," added Scott Sweet, senior managing partner at IPO Boutique, also in an email. "Facebook has acknowledged that they have not been satisfactory in this area."

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