Are Apps and Games a Facebook Moneymaker?
Facebook (NASDAQ:FB) announced that visits to its App Center increased to 220 million visitors per month, up from 150 million in August, and that over 250 million users play games on Facebook.com every month, up from 235 million users in August.
Additionally, Facebook has boosted its iPhone and Android apps to over 200,000 — including nine of the top ten grossing iPhone apps.
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CHEAT SHEET Analysis: Is this Growth a Catalyst for Facebook’s Stock?
One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’s stock. While the number of visitors to Facebook’s App Center increasing isn’t a huge catalyst, the numbers do indicate a steady growth over the past 90 days with no hint of slowing down.
Additionally, both the App Center and games have their own ways of generating revenue for Facebook. While the App Center relies on companies like Apple (NASDAQ:AAPL) to pay a referral fee for their revenue (usually 5 percent), the games on Facebook can generate income through advertising and a 30 percent hosting fee.
Marked increases in both of these areas is comforting for a company that has struggled to generate revenue from advertising in the past; gamers are more likely to stay on a page for a longer period of time and, thus, more likely to purchase from an advertisement—particularly when that advertisement is another game. Keep an eye out for how this effects Facebook’s bottom line during their next earnings announcement.
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