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Mobile: A Crucial Driving Force for Facebook’s Growth

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Mobile is bringing in big money for Facebook

During the second quarter of 2015, Facebook’s (FB) mobile advertising revenue was 76% of Facebook’s advertising revenue. This was a year-over-year increase of 62% compared to 2Q14.

Over the last ten years, mobile advertising has yielded 90% of Facebook’s revenue growth. Mobile-only monthly active users (or MAUs) were 655 million at the end of 2Q15. The above graph shows the increase in Facebook’s mobile-only users in the last six quarters.

Such high growth in active users shows how important these users are for Facebook’s growth trajectory. So mobile is an important driving force for the company’s growth. Continued strength in this area will help Facebook increase its revenue from advertising on mobile in the coming years.

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In Facebook’s 2Q15 earnings conference call, David Wehner, chief financial officer, commented, “Mobile remains the key driver of growth.” The company’s chief operating officer, Sheryl Sandberg, emphasizing the importance of mobile, said, “We believe we have best performing mobile ad product in the market, and video is making it even better.”

Google and Facebook mobile apps are user favorites

A recent study by Forrester Research points to the supremacy of Facebook (FB) and Google (GOOG) in the mobile app (application) world. Forrester conducted a survey of 2,000 US smartphone users over three months leading up to December 2014. Facebook accounted for 13% of the total time spent on mobile apps, including Messenger, WhatsApp Messenger, and Instagram. Google accounted for 12% of user time spent on a diverse set of apps, including YouTube, Gmail, and Search.

Other major mobile players such as Apple (AAPL), Amazon (AMZN), Yahoo!, and Microsoft reported user time of 3%, 3%, 2%, and 1%, respectively. Apple’s applications, including calendar and maps, are preloaded onto iPhones.

For a diversified exposure to Facebook, you can invest in the PowerShares QQQ Trust, Series 1 (QQQ). QQQ invests about 3.7% of its holdings in Facebook.

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