Facebook's opportunity is Google's challenge

By IVCPOST Staff Reporter

Jul 29, 2013 01:34 AM EDT

Analysts believed that Facebook handled mobile income quite differently from Google. Google would face challenges in the mobile operating environment while Facebook would deal with a huge opportunity to earn.

Facebook reported 14% total advertising income three quarters ago. In its most recent earnings report, Facebook said that the mobile advertising profit surged to 41% of its overall income. Meanwhile, its cost-effectiveness improved. The corporation's non-GAAP operating margin grew by 100 basis points from last year. Non-GAAP is a financial information from corporations that is calculated through the alternative methods from the Generally Accepted Accounting Principles. This would include amortization, depreciation and free cash flow, among others.

However, Google's difficulties in handling the mobile environment would not mean that Facebook is a better buy. Analysts reiterated that valuation matters. Venture capitalists should spend a significant premium to buy into the growth story of Facebook. At present, the social network trades at 14 times sale while Google trades at 5.2 times sales.

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