Here's Exactly Why Facebook Stock Is a Buy (Nasdaq: FB)

Facebook stockWe've been saying it for months - invest in Facebook stock (Nasdaq: FB).

Money Morning Capital Wave Strategist Shah Gilani knew - even when FB slipped below $20 a share in late 2012 - that the company had tremendous promise.

That's why he pounced on the chance to buy Facebook stock in February after the company bought WhatsApp Inc. for $19 billion. On Feb. 21, Gilani told Money Morning readers that "Facebook is still in the initial phase of a big growth opportunity," and at roughly $69 a share it "may never be this cheap again."

Three and a half weeks later, Gilani stood by his bet after FB stock slid 14% since his recommendation. He called the slump a near-term correction, and reiterated that with an impressive mobile strategy, Facebook's future was bright.

On March 7, Money Morning Defense & Tech Specialist Michael A. Robinson echoed Gilani's positive outlook.

"Over the past three years, Facebook has grown its earnings per share by 32%. At that rate, earnings and the stock itself could double in less than 2.5 years," Robinson - a Silicon Valley expert who has been watching tech sector transitions for decades - told readers.

The rest is history. Facebook stock's gone up more than 47% in 2014. Roughly 35% of the gains happened in the last five months.

And three details in Facebook's third-quarter earnings, released after closing bell today (Tuesday), go to show that this is a social media stock with room to go even higher...

3 Details from Today's Earnings That Prove FB Stock Is Still on the Rise

  • Facebook topped Wall Street expectations with earnings per share (EPS) of $0.43, compared to projections of $0.40 a share. Revenue was also a beat, coming in at $3.2 billion versus expectations of $3.12 billion. That's a sizeable top line."This has been a good quarter with strong results," Facebook Founder and Chief Executive Officer Mark Zuckerberg said in a statement. "We continue to focus on serving our community well and continue to invest in connecting the world over the next decade."
  • Monthly active users (MAUs) - the lifeblood of social media companies - grew 14% to 1.35 billion. Mobile monthly active users came in at 1.12 billion, and daily active users at 864 million. The world's largest social media company...is getting even larger.

  • Ad revenue was $2.96 billion - a whopping 64% increase over the same quarter a year ago. Mobile ad revenue accounted for 66% of total ad revenue. Mobile ad revenue is a really big deal for sites like Facebook. That's because by 2017, the mobile ad sector is predicted to be worth $721 billion, according to data compiled by Statista, compared to $235.4 billion in 2013. Today, Facebook's mobile ad revenue grew 4% compared to Q2 - a sign that Facebook's got a solid mobile ad formula.
  • But what about What'sApp... WhatsApp lost $140 million last year and only generated $10 million in revenue. We'll want to see more from this February acquisition in future earnings. Still, there was more to the $19 billion WhatsApp purchase than meets the eye - including pulling the rug out from under a main FB competitor - so we're not willing to pooh-pooh it yet. (You can read more about the strategy behind Facebook's purchase of WhatsApp here.)

Money Morning's bottom line: Buy, buy, buy Facebook stock. This giant is still growing. And per the numbers today, the company's proving it can monetize mobile; that's not an easy task, just ask Twitter."Mobile has become crucial and it's extremely ironic that Facebook is doing better than Twitter here," Money Morning Defense & Tech Specialist Michael A. Robinson said today. "Facebook has shown huge growth in mobile users and ads, a designation that should really be going to Twitter as a mobile-centric platform in the first place - but it's not."

Additionally, Facebook has a web advertising platform that went into beta testing in late September. It's called "Atlas," and it's going to "revolutionize web advertising."

And finally, there's a side to Facebook worth mentioning because it could be so profitable for Facebook stock - and its investors - in years to come: Big Data analytics."

Facebook is sitting on a hidden goldmine if it can figure out a way to monetize the user data of its over one billion user base," Robinson said.

Here at Money Morning, we believe tech investments are an essential step in wealth building. The sector creates some of the richest investors - and continues to get more lucrative. It's no surprise that Ebola stocks are the hot topic in tech right now. A number of companies are racing to find a treatment, and investors are piling in. But here's what you need to know about them...