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Google, Facebook ‘Digital Duopoly’ Seen With 67% Of Mobile Ad Market

Alphabet ( GOOGL ) unit Google and Facebook ( FB ) hold a firm grip on the digital advertising market, especially mobile advertising, says a MoffettNathanson report. Google and Facebook drove over two-thirds of the industry’s growth in 2015, says the MoffettNathanson report.  Alphabet-controlled Google and Facebook now hold 54% of the U.S. digital ad market, up from 43% in 2010, said Michael Nathanson, an analyst at MoffettNathanson, in the report. “We can’t think of any other media market place with this level of dominance,” he added. Facebook and Google have 67% of the mobile advertising market, says Nathanson. The analyst has buy ratings on Alphabet and Facebook and a neutral rating on Twitter ( TWTR ). Twitter has gained little ground in social media advertising, said Nathanson. Privately held Snapchat and Pinterest have emerged as competitors to Facebook, he says. Nathanson’s conclusions are based on the Interactive Advertising Bureau’s 2015 Internet advertising revenue report. “Given Facebook’s and Google’s domination in key digital verticals like mobile, social, and search, it’s hard to imagine the digital ad engine meaningfully slowing anytime soon,” said Nathanson. “Social advertising comprises over 70% of all of display’s growth… and Facebook has 65% share of social,” he added. Alphabet, Facebook and Twitter were all down modestly in pre-market trading in the stock market today , reflecting weaker stock futures.

How Facebook Reached A Blowout Quarter And Why It Will Continue

Analysts raised their price targets and heaped praise on Faceboo k ( FB ) following its first-quarter earnings report after the close Wednesday that exceeded all expectations. Among stats analysts pointed to was booming growth in mobile advertising. Mobile accounted for 82% of ad revenue at Facebook, up from 80% in Q4 and up from 73% in Q1 2015. During a tough earnings season for tech companies like Apple ( AAPL ), Alphabet ( GOOGL ), and Twitter ( TWTR ), Facebook stood out from the pack. The social-networking leader’s Q1 revenue jumped 52% year over year to $5.38 billion. Earnings per share minus items surged 83% to 77 cents. Growth in the top and bottom lines accelerated for the third consecutive quarter. “Ad growth remains explosive,” wrote Nomura analyst Anthony DiClemente, who raised his price target to 145 from 135. Facebook stock was up 8.5%, near 118, in afternoon trading in the stock market today , and earlier hit a new all-time high above 120. With robust results across all major advertising platforms, Facebook now has 3 million active advertisers, up from 2.5 million in its last update, and has 200,000 on Instagram. Facebook Has ‘Many Growth Levers Left To Pull’ RBC Capital Markets analyst Mark Mahaney raised his price target to 165 from 160. “Facebook continues to generate very high and very profitable growth, an extremely rare combination,” Mahaney wrote. “And we see in Facebook plenty of strong, secular platform growth ahead, with many growth levers left to pull.” Monthly active users at Faceboook grew 15% year over year to 1.65 billion, the fastest growth rate in two years and accelerating from 14% growth in Q4. “This overall growth rate remains impressive, given Facebook’s massive size,” Mahaney wrote. He noted Facebook’s 1.65 billion users do not include Instagram’s 400 million users, or the 1 billion monthly active users on its WhatsApp messaging platform. Alphabet is the only other global media company with properties above 1 billion, he wrote. FBN Securities analyst Shebly Seyrafi raised his price target on Facebook to 155 from 135. “Having succeeded very well on its transition to mobile, Facebook has many growth drivers ahead,” Seyrafi wrote. This includes Instagram, Messenger, video and its Oculus Rift virtual reality business, with WhatsApp further down the road. Cowen analyst John Blackledge raised his price target on Facebook to 145 from 140. Jefferies analyst Brian Pitz raised his price target to 160 from 145. The Word From Facebook CEO Zuckerberg: Bold In the company’s earnings conference call with analysts, Facebook CEO Mark Zuckerberg touched on some of the opportunities ahead. “Facebook has been built by a series of bold moves,” Zuckeberg said. “And when I look out at the future, I see more bold moves ahead. “A lot of what we’re building today in areas like connectivity, artificial intelligence and virtual and augmented reality may not pay off for years. But they’re important to our mission of connecting the world, and I’m committed to seeing this mission through and to leading Facebook there over the long term,” Zuckerberg said. Among social networking stocks, Facebook earnings towered above those of Twitter. The micro-blog site posted a Q1 revenue miss and gave Q2 revenue guidance well below expectations. Twitter said monthly active users rose to 310 million, up 3% year over year and up from 305 million in Q4. But that marked the ninth straight quarter of slowing year-over-year user growth. LinkedIn ( LNKD ), the networking site for professionals, reports earnings after the close Thursday. LinkedIn saw its stock bomb 44% to a three-year low after the company reported fourth-quarter earnings on Feb. 5, as its Q1 guidance widely missed estimates. The Q1 consensus estimate for LinkedIn is revenue of $828.5 million, up 30% year over year.

Facebook Q1 Eases Tech Woes After Apple, Microsoft, Alphabet Flop

During a tough earnings season for tech companies like Apple ( AAPL ), Alphabet ( GOOGL ), Microsoft ( MSFT ), Netflix ( NFLX ) and Twitter ( TWTR ), Facebook ( FB ) stood out from the pack Wednesday with a first-quarter report that crushed expectations. The social-networking leader’s Q1 revenue jumped 52% year over year to $5.38 billion, topping the consensus estimate of $5.26 billion. Earnings per share minus items surged 83% to 77 cents, above the consensus estimate of 62 cents. Growth in the top and bottom lines accelerated for the third consecutive quarter. Facebook stock shot 9% higher in extended trading, after closing up 0.1%. Among other metrics in its Q1 report, Facebook said daily active users climbed 16% to 1.09 billion on average. Monthly active users rose 15% to 1.65 billion, and mobile monthly active users increased 21% to 1.51 billion. Mobile advertising revenue represented approximately 82% of total ad sales in Q1, up from 73% a year earlier and in line with estimates. The latest advances come amid a broader effort to enhance the user experience and continue to grow revenue. As part of its video monetization strategy, Facebook has been methodical in rolling out video ads, including on its photo- and video-sharing app Instagram. In the past year, Facebook also has been more aggressive expanding advertising on Instagram and offering better analytics and measurement tools for advertisers. And the company also boosted its video ad platforms, creating new ad formats and ad buying options, with enhanced targeting capabilities. That strategy appears to be paying off. Facebook now has 3 million advertisers, up from 2 million six months ago. Facebook didn’t provide specific numbers on Oculus Rift shipments, which began late last month, and said it won’t have a material impact on 2016 revenue. But CEO Mark Zuckerberg was upbeat about virtual reality on a conference call, saying “We see virtual reality as the next big computing platform, and we’ll continue to make investments in that area.” Facebook also said Wednesday its board of directors approved a proposal to create a new class of non-voting capital stock. If approved, the company intends to issue two shares of Class C capital stock as a one-time stock dividend for each outstanding share of Class A and Class B common stock. Facebook said the proposal would allow Zuckerberg to maintain his long-term vision for the company, mitigate succession risk and potential future voting dilution, while also enabling him to pursue his goals of giving away 99% of his shares “to advance human potential and promote equality via the Chan Zuckerberg Initiative.” “I’ll be able to keep founder control of Facebook so we can continue to build for the long term, and Priscilla and I will be able to give our money to fund important work sooner,” Zuckerberg said in a statement. The Q1 report caps a heady month for Facebook, during which Zuckerberg unveiled his roadmap at Facebook’s annual F8 Developer Conference. He emphasized pushing Facebook’s Messenger chat platform deeper into the business world with chatbots, enhancing Live video with virtual reality, and expanding the social network to remote regions of the world. Analysts believe the monetization strategy of Messenger will closely follow that of Instagram, with both platforms seen becoming multibillion-dollar businesses. “We had a great start to the year,” said Zuckerberg in a statement. “We’re focused on our 10-year roadmap to give everyone in the world the power to share anything they want with anyone.”