Facebook, Inc.: The Next 1 Billion Users

By Markets Fool.com

Facebook 's number of monthly active users (MAUs) has soared from 100 million at the end of 2008 to 1.44 billion today. But now that Facebook has a user base that exceeds the population of China, many investors are likely wondering if the largest social network in the world can keep growing. Last quarter, MAUs rose 13% annually, a slight slowdown compared to 15% growth in the prior-year quarter.

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Source: Pixabay

However, I strongly believe that Facebook still has room to grow. Let's take a look at several of Facebook's long-term strategies, and how they might help the social network gain at least a billion new users over the next few years.

A new lightweight app
Facebook recently launched Facebook Lite, a stripped-down version of its app aimed at developing markets in parts of Asia, Africa, Latin America, and Europe. The Google Android app weighs in at just 1MB, which makes it a quick download on slower 2G networks.

Basic photo sharing services and push notifications are supported, while data-heavy features like videos and location-tracking have been removed. By comparison, the full version of Facebook for Android is a hefty 25MB download.

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About 2.9 billion people worldwide use the Internet. If we deduct users in China, where Facebook is blocked, we have about 2.2 billion people online. If we subtract Facebook's active user base of 1.44 billion, we can assume that at least 700 million to 800 million people use the Internet but don't use Facebook yet. Many of those people may be avoiding Facebook today due to concerns regarding data limits.

Facebook Lite. Source: Google Play

Facebook already has a spartan app for feature phones, Facebook for Every Phone. However, many feature phone owners are expected to upgrade to entry level smartphones soon. Research firm GfK Target Setter forecasts that global smartphone sales will rise 18% annually this year, with most of that growth being driven by developing markets like India, China, and Indonesia.

Free Internet for everyone
When Facebook first introduced Facebook for Every Phone in 2011, it collaborated with 20 international carriers to offer 90 days of free data access to the app. Getting feature phone users hooked on Facebook with free data worked -- by July 2013, the app had over 100 million active users worldwide.

Later that year, Facebook expanded that strategy with Internet.org, an alliance of software, hardware, and telecom companies that provide a platform of smartphone apps that can be used without counting toward monthly datalimits. Facebook is subsidizing that data usage through partnerships with local carriers. Facebook also plans to launch solar-powered drones to deliver constant Internet connections to developing nations and remote areas.

Facebook's solar-powered Internet.org drone. Source: Facebook

According to Facebook, Internet.org is a philanthropic effort that helps people in remote and developing areas gain Internet access. But critics warn that Internet.org is merely a ploy to trap first-time smartphone users within Facebook's walled ecosystem of approved apps.

Despite those criticisms, Internet.org has been fairly successful, crossing 1 billion users in May after its expansion into Malawi. Zuckerberg previously stated that he hopes to help connect "5 billion" people to the Internet with Internet.org.

Returning to China
Six years ago, Facebook was banned in China. However, there has been lots of speculation that CEO Mark Zuckerberg could bring Facebook back to the Middle Kingdom.

Last year, Zuckerberg impressed an audience of academics and business elite at Tsinghua University in Beijing during a half-hour interview conducted entirely in Chinese. Zuckerberg also reportedly "forced" employees to readThe Governance of China, a collection of speeches and interviews with Chinese president Xi Jinping. Lu Wei, China's Internet chief, even visited Facebook headquarters last December.

If Zuckerberg can somehow engineer Facebook's return to China, it could provide a massive boost in active users. China currently has nearly 700 million Internet users -- more than twice the population of the entire United States. However, Facebook would have to pry users away from deeply entrenched social competitors like Tencent's QZone, which had 629 million active users worldwide at the end of 2014.

The next billion users are already here
Reaching new users in developing markets and returning to China might provide Facebook with a billion new users over the next few years. However, investors shouldn't forget that Facebook already owns WhatsApp and Instagram, which respectively have over 800 million and300 million active users. Those 1.1 billion users also represent fresh opportunities for monetization beyond Facebook's core News Feed.

Looking ahead, I don't expect Facebook's user growth to slow down anytime soon. 1.44 billion certainly sounds like a lot of users, but there are still plenty of Internet users out there who have never posted a status update.

The article Facebook, Inc.: The Next 1 Billion Users originally appeared on Fool.com.

Leo Sun owns shares of Apple and Facebook. The Motley Fool recommends Apple, Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.