RBC's Mark Mahaney: Facebook Will Be 'Biggest Beneficiary' Of Mobile, Video Growth

RBC Capital Markets’ Mark Mahaney issued a note to clients on Monday, in which he reiterated his Outperform rating on Facebook Inc FB. He attached a price target of $105 to the rating, arguing that the company can see an additional $5 billion in revenue in the next five years coming from auto-play video ads and other things.

Mahaney was on CNBC to explain why he thinks Facebook could be the "biggest beneficiary" of the growth in video and mobile.

Natural Win

"So, [we] laid out a couple of what we call Greenfield opportunities, and auto-play video ads are still a relatively novel experience on Facebook," Mahaney began.

"We have only seen them over the last nine months. We sense, based on surveys we have done of advertisers, only about 10 percent of the 500 advertisers that we surveyed are currently on there with video ads, but an additional 50 percent want to be on there— on Facebook with these ads."

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He went on, "So, we think there is enormous appetite in the market, and Facebook has gotten more and more video impressions, inventory. There is a natural win here, we think, for the advertiser and for Facebook."

As Big As Mobile Advertising

Mahaney was asked if this auto-play video ad opportunity for Facebook is going to be as big as the mobile advertising opportunity has been. He replied, "We have one of the best, most successful pivots in Internet corporate history when Facebook figured out mobile. It took them about a year to do that, and that’s probably a pretty good setup for what’s going to happen here with video.

"Our guess is long-term, call it five years, more than 50 percent of the ad dollars that are going to Facebook could probably be in this kind of video format. So, yes [...] the size of the pivot is just as big, and there’s a huge source of funds. By the way, it’s all those TV ad budgets – they have the opportunity now to migrate online," Mahaney pointed out.