Citi Claims To Debunk A Facebook Monetization Myth

Courtesy of Benzinga.

Citi issued a research report that claimed to debunk "the monetization myth" surrounding Facebook Inc (NASDAQ: FB).

Analyst Mark May noted that "recent reports have suggested that Facebook’s (FB) monetization (i.e., ad revenue per user) is materially greater than Twitter Inc’s (NASDAQ: TWTR), which suggests that FB may not have as much upside in monetization as one of its closest comps."

May believed that "this analysis is misleading and has not considered an important variable – the relative differences in engagement (i.e., time spent), which directly impacts the available ad inventory (i.e., monetization potential)."

According to May, "when engagement is taken into account (e.g., avg. feed views per month of 210 for TWTR users vs. 950 for FB), we estimate that FB’s monetization is actually 50-60 percent less than TWTR (not 100 percent greater as some have reported)."

May concluded with the belief that "as FB increases its mix of video and other brand advertising and as it continues to improve targeting and measurement that its monetization can continue to rise."

Citi maintained a Buy rating on Facebook and a price target of $86.

Facebook Inc closed Tuesday at $73.47, up 0.66 percent.

Twitter Inc closed at $48.56, up 0.14 percent.

Posted-In: Citi Mark MayAnalyst Color Analyst Ratings