- By Sangara Narayanan
Facebook's (FB) growth has been phenomenal in the last five years as the social media giant surprised everyone quarter after quarter with respect to growth in user base, average revenue per user and every important metric as possible. This continued growth has led to strong double-digit expansion in revenues, which has been almost consistently north of 50%.
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The intrinsic value of FB
One of the key factors for this growth is Facebook's strong user base growth across all regions. Facebook had 606 million monthly active users in the U.S. and Canada at the end of 2015, 170 million more than what they had at the end of 2014. Europe's monthly active user base increased by 224 million during the same period. That's an addition of 394 million monthly active users in some of the most developed regions in the world.
Internet penetration and the awareness about Facebook has always been high in the U.S. and Europe. Despite that, Facebook has found a way to increase its count in a market where its penetration was already high. Twitter (TWTR) managed to add 2 million to its monthly active user base in the U.S. last year, which is in stark contrast with what Facebook has been able to achieve in English-speaking developed markets such as Canada, U.S. and U.K.
E-marketer, a leading market research firms, says that more than 20% of internet users in the U.K. use Twitter, while the number goes past 60% for Facebook.
The number has been holding steady in the U.K. in terms of penetration, but the important thing to note is that Facebook is capable of reaching more than 6 out of 10 internet users.
The internet user base is still rapidly expanding. It increased from 1.024 billion in 2005 to more than 3 billion in 2015. At 60%, that's 1.8 billion users, very close to the monthly active user base number that Facebook closed this year with.
Since there is plenty of room for this number to grow in the APAC region and other developing markets, Facebook's user base growth seems to have a lot of runway. Now, throw in the fact that it has kept its developed market numbers ticking at a steady pace, and Facebook's revenue growth looks like it has quite a lot of time before it runs out of steam and enters the more mature and stable growth phase.
That's one of the reasons Facebook is so much more valuable as a company and an investment.
Disclosure: I have no positions in the stocks mentioned above and no intention to initiate a position in the next 72 hours.