Facebook Inc (NASDAQ:FB) has logged impressive sales growth throughout its history as a publicly traded company, but one Wall Street analyst believes that growth will accelerate considerably over the next five years.
In a note to clients this morning, Piper Jaffray analyst Samuel Kemp writes that the evolution of Instagram’s ad units, along with Messenger’s potential to “disrupt the in-house and outsourced customer care industry” could triple Facebook’s revenue by 2022. Based on current 2017 revenue estimates around $38.5 billion, that would mean revenue swelling to over $115 billion in just five years.
The analyst sees Instagram revenue surging from just $2 billion in 2016 to $22 billion in 2021, an incredible ten-fold increase. The remainder of the sales growth would come from Facebook’s namesake platform, WhatsApp, and Messenger, the latter of which hasn’t been monetized much at all yet.
That doesn’t mean investors should expect an immediate surge in Facebook shares now, however. Kemp says the stock will likely remain range-bound for the rest of the year, with ad revenue growth already baked into the current valuation.
Hence, the analyst maintained his Overweight rating and $165 price target on the stock, which implies a modest 6.6% upside to FB’s Thursday closing price of $154.71.
Facebook Inc shares rose $0.29 (+0.19%) in premarket trading Friday. Year-to-date, FB has gained 34.47%, versus a 9.53% rise in the benchmark S&P 500 index during the same period.