Facebook (FB) currently has more than 900 million monthly active users. The United States is the social network's biggest market with nearly 157 million users. Brazil and India come next, with 47 and 45 million active Facebook users, respectively.

According to research from AbsolutData, India will surpass the U.S. in terms of Facebook users by 2015. India currently has more than 120 million Internet users, and the number is expected to exceed 400 million by 2015. Even though only a small fraction of Indian users speak English, Facebook's support for multiple Indian languages will drive growth.

Monetization to be a huge challenge

The average ad revenue generated per Indian user is much lower than the revenue generated per American user, and there is no reason to believe Facebook will be able to reverse the trend. Most Indians haven't yet been exposed to virtual transactions and generate much less virtual goods transaction revenue compared to Americans.

Annual advertising spending in India is just $255 million compared to $158 billion in the U.S. Additionally, we expect most of the Facebook usage growth in India to be driven primarily by the increasing smartphone and mobile internet penetration. Facebook recently admitted that it is finding it difficult to properly monetize its mobile audience, and that problem will be compounded in India, given the already low ad spending.

We currently expect Facebook's monthly active user base to increase to more than 2 billion by the end of the forecast period, driven primarily by growth in international markets like India. However, any pressure on its average ad revenue per page view or average virtual goods spent per user could weigh on its value significantly.

We have an $89 billion Trefis valuation estimate for Facebook, which translates to a $33 Trefis price estimate based on its diluted share count.

Facebook is the largest social network in the world. It competes primarily with much smaller competitors like Google's (GOOG) Google+, Twitter, LinkedIn (LNKD) and Pinterest in the social networking space, and with Google, Microsoft (MSFT) and Yahoo (YHOO) for online advertising dollars. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

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