This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

How Facebook Could Overtake Google

Updated from 11:46 a.m. to include information about new News Feed in the sixth paragraph.

NEW YORK (TheStreet) Facebook (FB) isn't just the world's largest social network. It's an advertising behemoth, which may soon wind up rivaling the likes of Google (GOOG).

UBS analyst Eric Sheridan boosted his price target on Facebook to $90 from $72, noting that fourth-quarter pricing strength has carried over to the first-quarter, and may be more sustainable than previously thought. "Our Q1 advertiser channel checks suggest that the pricing strength exhibited in Q4 (+92% YoY price-per-ad) has carried over into early 2014 and is likely sustainable for longer than our prior estimates had assumed," Sheridan wrote in the report. "In particular, we note the improved quality of advertisers & increased frequency of higher CPM formats (mobile app ads in particular) within the existing ad load."

Sheridan now expects Facebook to generate $11.9 billion in revenue in 2014, up from $11.1 billion, with an Adjusted EBITDA of $7.4 billion and adjusted earnings of $1.25 per share, up from $6.8 billion and $1.27a share, respectively. He also boosted his 2015 estimates, and now expects $16 billion in sales, $10.2 billion in Adjusted EBITDA and $1.80 per share in earnings. Analysts surveyed by Thomson Reuters expect Facebook to generate $11.37 billion in revenue in 2014, earning $1.25 a share, and $14.88 billion and $1.68 in 2015, respectively.

Shares of Facebook were higher in early Monday trading, up 2.8% to $71.74 on the back of the price target boost.

Much of what Facebook has been able to accomplish, particularly as it relates to mobile advertising, is app install ads, which the company launched in October 2012. Now, more than a year later, Facebook has been able to generate 145 million app installations from Google Play and Apple's (AAPL) App Store. The ads appear in Facebook's mobile app on users News Feeds, and helped the company generate $1.24 billion in mobile advertising revenue during the fourth quarter. Google is still trying to garner success with its initiative, which has links inside mobile apps to Google's search results.

The report comes as Facebook recently changed the look of its News Feed. Facebook has redesigned its desktop News Feed to be more streamlined, similar to what it has on mobile.

This comes as Facebook is set to hold F8, its developer conference for developers on April 30, in San Francisco. It's the first F8 conference since 2011, and in it, Facebook intends to help developers with getting started guides, best practices, infrastructure ideas, tips for advertising and ways to monetize the app or game the developer has built.

For the entire fourth quarter, Facebook generated $2.59 billion in sales, as advertising revenue soared 76% year over year to $2.34 billion. That allowed the company to earn 34 cents a share, beating the consensus estimates of 27 cents a share and $2.33 billion in sales.

In comparison, Google generated earnings of $12.01 a share in the fourth quarter on $13.55 billion in revenue, but the company noted cost-per-click, a key advertising metric, fell 11% year-over-year and 2% sequentially. However, paid clicks, which include clicks related to ads served on Google sites and the sites of its Network members, increased approximately 31% over the fourth quarter of 2012, and 13% sequentially.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,926.50 -34.07 -0.20%
S&P 500 1,974.05 -4.29 -0.22%
NASDAQ 4,432.2860 -17.2780 -0.39%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs