• by Mark Walsh  @markfwal, January 22, 2014

Much of the talk surrounding Facebook lately has been about fleeing teens and stagnating user growth. Even more ominous, a new Princeton study making the rounds suggests that the social network could lose 80% of user base in the next three years.

But when it comes to Facebook’s latest quarter, at least, the outlook is decidedly more upbeat. When the company announces fourth-quarter earnings next week, analysts expect to see continued healthy revenue growth driven by mobile advertising and usage.

Wall Street is projecting revenue of $2.34 billion, a 48% increase from the year-earlier period. Profit is expected to come in at 27 cents a share, up from 15 cents a share a year ago. In the prior quarter, mobile advertising accounted for 49% of total ad sales, and that proportion is expected to be higher in the fourth quarter.

While newsfeed ads -- across both the desktop and mobile -- continue to be the backbone of Facebook’s ad business, new research reports from Macquarie Securities and Pivotal Research Group previewing Facebook’s Q4 earnings, highlight the contribution of its mobile app install ads. Pivotal’s Brian Wieser estimates the ads, designed to promote app downloads, could add about $200 million in revenue in the quarter.

Macquarie’s Ben Schachter points out that demand for app install ads has remained strong: “As app developers have few alternative means of discovery across broad audiences. We expect to see increasing pricing in this area as well.”

Further, Facebook said on Wednesday it has begun working with a small group of advertisers to run ads in third-party apps, marking the latest step toward launching its own ad network business. The company has run similar tests in the past, but this time it’s working directly with developers and advertisers rather than with an outside ad-serving platform.

“Our aim is to demonstrate even greater reach with the same power of Facebook targeting for advertisers both on and off Facebook,” stated the company’s business blog. The company first tested a mobile ad network in September 2012, showing banners and interstitials on outside apps and mobile sites before putting it on hold three months later to focus on ads in its own news feed.

Facebook said it would provide more details about the current test in the coming months. While unlikely to generate meaningful revenue in the near term, Wieser in an interview suggested a Facebook-run mobile ad network could spell trouble for Millennial Media and other mobile ad companies that are more dependent on app developers for revenue.

Even before Facebook had revealed its ad network test, Wieser had increased his price target from $57 to $63 by the end of 2014 on optimism about the prospects for newer ad products, including app install ads, the Facebook Exchange (FBX), Promoted Posts and the expected rollout of video ads later this year.

“Into 2014, many of these trends will continue and Facebook should be able to sustain growth from its brand and e-commerce-based advertisers with new retargeting products, as FBX continues to expand (aided by Google’s DSP gaining access beginning in 1Q14) and as video helps Facebook continue to capture a growing share of wallet,” he wrote.

 Macquarie’s Schachter, however, isn’t convinced of Facebook’s successful expansion into video ads, observing that the product is still in beta testing. “Given the slow, deliberate pace of development thus far, the ramp may be slower than bullish estimates hope,” he wrote.

Schachter also cited the widely reported loss of younger users as a concern for Facebook. A study by GlobalWebIndex released this week indicated the proportion of active teen users worldwide continues to trend downward. “While many are going to Instagram, the departure of users from FB’s network is still an issue. This also raises questions about if/when users could begin to defect from Instagram,” stated the Macquarie report.