Buy This Stock Before You Buy Facebook
The following video is part of our "Motley Fool Conversations" series, in which senior technology analyst Eric Bleeker and Chief Technology Officer Jeremy Phillips discuss topics across the investing world.
In today's edition, Eric and Jeremy look at how much major Internet companies are making per user. While Facebook has captured the imagination of investors, its challenge is that the company still makes only about $5 a year per active user. Compare that to Groupon, which makes more than $11 per user, and Netflix, which collects nearly $150 per user, and you can see the power in moving away from advertising and toward subscription-based advertising. To this end, Eric and Jeremy suggest that investors interested in the social media space look at LinkedIn, a company building out a powerful model that is reliant on recurring premium sales instead of advertising. While that model is still in its infancy, LinkedIn already gets more than two-thirds of its revenue from non-advertising sources and has ample growth opportunities in the years ahead.
Social media names might garner a lot of investor attention, but the truth is that they're playing second fiddle to an even larger revolution in technology. To better prepare investors for this new revolution, The Motley Fool has just released a free report on mobile called "The Next Trillion-Dollar Revolution" that details a hidden component play inside mobile phones that is also a market leader in the exploding Chinese market. Inside the report, we not only describe why the mobile revolution will dwarf any other technology revolution seen before it, but we also name the company at the forefront of the trend. Hundreds of thousands have requested access to previous reports, and you can access this new report today by clicking here -- it's free.
At the time this article was published Eric Bleeker has no positions in the stocks mentioned above. Jeremy Phillips has no positions in the stocks mentioned above. The Motley Fool owns shares of Google and LinkedIn.Motley Fool newsletter services recommendGoogle and Netflix. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.