Will Facebook shares still soar as mobile ad sales hit peak?
Ask a room full of analysts their views about a technology stock and you are liable to get as many opinions on what the shares are really worth as there are bodies in the room.
Huge differences of opinion exist about even the world's biggest tech companies, and whether they are overvalued or undervalued.
Netflix stock has tripled in 2013 but the company is criticised for overestimating how quickly it can grow its subscriber numbers. Google comes under fire for its Android operating system, which some argue faces serious challenges from new competitors.
But it is Facebook that has taken centre stage in analyst debates this year. The stock has posted big gains in recent months, gaining ground lost after last year's disastrous IPO. The social networking giant's share price fell to a dismal $17 (€13) last summer after it went public at $38, but today stands at $42.66 – a recovery so strong that the company's total market capitalisation passed the $100bn mark for the first time ever last week.
Much of these gains are a result of strong financial results released by the company in July. Shares price jumped by more than 30pc after the quarterly results showed huge growth in Facebook's mobile advertising division. The company sold $656m worth of ads for mobile devices between April and June, up from $375m it sold in the previous three-month period.
The ability to make money from mobile advertising is a huge focus for investors; four-fifths of Facebook's 101 million US daily users now log on from a mobile device. Facebook has a strong hold on this rapidly growing market. Its app is well developed and has been downloaded by users in droves.
Yet all is not as rosy as it seems. This massive growth in quarterly mobile ad sales looks impressive, but these sales are growing from a standing start. The company posted virtually zero revenues from the division the year before. That level of growth will be difficult to sustain as the market matures.
Critics also argue that the mobile advertising market is too small to move the needle on Facebook's bottom line.
Technology research company Gartner predicts it will grow 29pc every year between 2013 and 2016. That growth rate is high, but not necessarily high enough to justify Facebook's massive market capitalisation, unless it can grow much faster than the rest of the industry.
All users are also not created equal. In its second quarter, Facebook made an average of $1.60 per user globally. But this figure disguises vast regional differences. US and Canadian users generated $4.32 each, but the rest of the world region, which includes fast-growing developing markets like India and Brazil, generated only $0.63 per user. This is significant because these are the markets that will supply the most growth in mobile users – the US, Canada and other developed countries have already switched over to mobiles, so ad revenues have peaked already.