In Mobile, Here's What Facebook Is Up Against

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From a standing start in 2011, when neither company generated any revenue from its mobile platform, Twitter will generate more revenue than Facebook (NAS: FB) this year, according to eMarketer. And while the digital marketing research firm expects Facebook to be competitive in the mobile display segment, taking the leading market share next year, it's difficult to see how the social network's current business model and prospects come anywhere near supporting the stock's valuation.

Let's look at eMarketer's estimates for mobile display ad revenue market share through 2014.

Company

2012

2013

2014

Facebook6.6%19.5%20.5%
Google (NAS: GOOG) 18.4%17.5%17.6%
Pandora (NAS: P) 20.5%17.6%16.3%
Twitter11.7%13.8%14.5%
Apple* (NAS: AAPL) 6.8%5.2%4.8%
Other36%26.4%26.4%

*iAd.
Source: eMarketer, September 2012.

Looking at the whole pie
The trouble is that mobile display ads are just part of the mobile-revenue pie -- 38% last year. In 2012, search will account for roughly half of all mobile-ad revenue, and that's a segment that Google dominates, with 95% market share. eMarketer expects search's contribution to total mobile revenue and Google's dominance of the former to remain constant over the next several years. As a result, this is how the forecasts for total mobile-revenue market share play out over the next few years:  

Company

2012

2013

2014

Google54.5%54.1%54.1%
Facebook3.2%8.8%9.5%
Pandora8.7%7.9%7.5%
Twitter5%6.2%6.7%
Apple*2.9%2.3%2.2%
Other26.2%20.7%19.9%

*iAd.
Source: eMarketer, September 2012.

These numbers don't add up
Finally, the pie isn't all that large to begin with in dollar terms -- an estimated $6.6 billion by 2014 -- so Facebook's 10% market share by 2014 wouldn't amount to needle-moving revenues, much less profits. eMarketer estimates that Facebook will generate $629.4 million in mobile revenue in 2014. For a company that's hanging its strategic hat on the transition to mobile and still sports a market capitalization in excess of $40 billion, that's a rounding error.

All the same, one of The Motley Fool's top analysts believes there's a lot more to this company than meets the eye, so read up on whether there is anything to "like" about it today, and we'll tell you whether we think Facebook deserves a place in your portfolio. Access your report.

The article In Mobile, Here's What Facebook Is Up Against originally appeared on Fool.com.

Fool contributorAlex Dumortierholds no position in any company mentioned. Check out hisholdings and a short bio; you can follow him on Twitter,@longrunreturns. The Motley Fool owns shares of Apple and Facebook.Motley Fool newsletter serviceshave recommended buying shares of Facebook, Apple, and Google and creating a bull call spread position in Apple. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.

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