This Company Should Be on Facebook’s Shopping List
When Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB) get in a scuffle to buy the same company, I decide to start reading in between the lines. For the past several months, rumors had been swirling about Facebook’s interest in Titan Aerospace. But Google was the one to fly in and close the deal. Even so, Facebook has been on a shopping spree.
Recently, Facebook acquired the team of a UK-based drone maker. The team has also made major acquisitions in the last few months alone. In February, it bought WhatsApp — a hugely popular texting service — for $19 billion in cash and stock. WhatsApp had 450 million users at the time, and has now hit the half-billion mark.
Just one month later, founder Mark Zuckerberg announced they were spending another $2 billion to buy Oculus Rift, a virtual reality headset maker. Earlier this week, Facebook announced a slew of new products and features, including a new mobile ad exchange, known as Facebook Audience Network. The goal is to let developers better monetize their apps and naturally lead Facebook to generate some nice revenues. Also, don’t forget about the purchase of Instagram several years ago.
So is this the plan going forward? What do I mean? Let’s face facts. We’re now two years past Facebook’s IPO in May 2012, in which the stock dropped over 50 percent. But, the stock has come back over 400 percent since then. There is a reason for this and it has to do with earnings. In the first two quarters after going public, it reported 0 percent earnings growth. However, in mid-2013, Facebook discovered that leveraging mobile was key to generating revenues as well as a higher share price. To be honest, on my own personal Facebook account, I only access the mobile version.
After mobile, and of course these pertinent acquisitions, in the first-quarter of 2014, Facebook surpassed estimates on both earnings and sales, posting earnings per share growth of 183 percent and revenue gains of 72 percent. For 2014 overall, analysts expect earnings to rise 62 percent, followed by a 28 percent gain in 2015. But with Facebook growing not just organically, but via acquisitions, future share gains can be had through more acquisitions. There are a number of different companies Facebook could be targeting. In terms of the social media atmosphere, that is, reaching new customers and avenues for selling its advertising (and that’s what Facebook really is, a glorified advertising company), the company should be looking to make cheap acquisitions that return a ton of users. One such company is relatively cheap, boasts incredible user growth, and is a target that Facebook should consider before Google jumps in and makes a bid.
That company is MeetMe.