Facebook has established itself as a dominant force in the display advertising business, given its ability to drive heavy engagement and grow a base that reached 845 million monthly active users in December.

We expect that monthly users will pass 1 billion this year, and with such growth, Facebook will create more distance between itself and other display advertisers such as Yahoo (YHOO) and AOL (AOL).

We have updated our analysis on Facebook, and below we discuss a few drivers that support our analysis. Our intrinsic value estimate of $74 billion, roughly $31 a share, is at the lower side of Facebook's rumored IPO valuation of $75 billion to $100 billion. We invite users to test their own assumptions on Facebook's growth prospects using our drivers. (See our complete analysis for Facebook.)

1. Privacy concerns will increase

Facebook's user base will expand in the foreseeable future, and we expect it to cross the 1 billion mark during 2012. However, as Facebook tries to bring in more media offerings like music and video, the information it collects on its users will only increase. This trend could stoke additional privacy concerns for Facebook, which faced similar concerns in the past like the blowback it received from its "frictionless sharing" idea.

While we expect the number of users to increase, there could be a downside risk to our estimates should users choose not to use Facebook due to heightened privacy concerns or if regulators in the U.S. or abroad limit access to Facebook due to these concerns.

2. Mobile to drive advertising revenue

Facebook did not generate meaningful revenue from its mobile platform last year, despite the 425 million monthly active users access the site on smartphones and tablet devices. However, given that the mobile advertising market is expected to grow to around $24 billion in 2015, Facebook is expected to work more closely with mobile advertising networks in the future to ensure that it monetizes its mobile subscriber base.

While this increases the absolute monetization for Facebook, lower revenue-per-page-vie​w rates on mobile may reduce the overall revenue per page view for the company.

3. Zynga Direct may hurt virtual goods spending

Facebook generated around $557 million last year by selling virtual goods on its website. While we expect the market for virtual goods to expand further, Facebook's largest gaming partner, Zynga, has already launched its own Zynga Direct gaming platform. If Zynga reduces its reliance on Facebook's platform, Facebook could see a decline in the average user spend on virtual goods.

4. Google+ has advantages

For now, Google's (GOOG) Google+ service remains the underdog in the social networking market. However, Google is aggressively pursuing growth for Google+ and its user base reached 100 million around six months ago. Facebook needs to prepare for further integration of Google features, like the YouTube video platform, on Google+, which could increasingly make it a more engaging website with attractive digital content.

5. Social commerce expected to grow

According to eMarketer, the global social commerce market will grow to around $30 billion in 2015 from $5 billion in 2011. We anticipate Facebook will tap this lucrative market by acting as a platform for the sale of physical goods by numerous brands and retailers that already have a large presence on the site. Social commerce is the next logical step as these brands try and sell products through Facebook to fans who have "liked" their page.

We have updated our analysis for Facebook based on the company's recent regulatory filing ahead of its initial public offering later this year.

The updated Trefis valuation for Facebook stands at roughly $74 billion, based on revisions to our forecasts for Facebook's metrics, including revenues, EBITDA margins, capital expenditures and net working capital.