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Facebook Poised for Massive Growth

The social-networking giant's trove of data on its users is its ace in the hole as the firm races to develop new revenue streams.

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On the face of it, an immense community of more than 900 million monthly users is remarkable by any measure. These users are constructing their "social graph," building new habits in the way they communicate with friends and acquaintances while sharing applications and content. More than half of these users interact with the Facebook platform each day.

Advertisers have dipped their toes in the water, spending more than $3.1 billion last year on a platform that we would characterize as immature and prepubescent--many agencies and marketers aren't certain how to measure return on investment for their ad spending. Still, Facebook is capturing data and online/user activity in a comprehensive way about which competitors can only dream. We expect the company to capture a massive share of the online advertising market while developing new revenue streams through local advertising, payments, and commerce. In spite of our bullishness, we expect revenue growth to be highly variable.

Rick Summer does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.