The FB stock price opened at an all-time high today (Thursday) of $108.47 per share after Facebook Inc. (Nasdaq: FB) reported strong Q3 earnings yesterday.
Facebook reported earnings per share (EPS) of $0.57 on $4.5 billion in revenue. This beat Wall Street's expectations of $0.52 on $4.37 billion in revenue.
Aside from revenue, investors also closely watched monthly active users (MAUs) and daily active users. Facebook grew MAUs to 1.55 billion in Q3. That's a 14% percent increase from last year. Facebook reported daily active users of 1.01 billion, which exceeded estimates of 992 million.
A larger, active user base makes Facebook more appealing to advertisers, which brings in more revenue from advertising.
At its opening price today, the Facebook stock price has jumped nearly 65% since its initial public offering (IPO) price of $38 per share.
Money Morning E-Commerce Director Bret Holmes says the sky is the limit for Facebook and its advertising business. You see, Holmes uses web advertising across multiple social media platforms as part of his job here at Money Morning.
"They are still their only advertising client," Holmes said. "Wait until they supplant AdSense as the de facto ad serving platform for the rest of the world. Facebook will be the largest thing the Internet has ever seen for advertising and five times bigger than Google has ever been (on the Internet - not in aggregate for all business). They will drive more conversions, deeper spends, and more interaction. They are just getting started."
Advertising will continue to drive the FB stock higher from here, but the social media behemoth has additional sources for revenue that it hasn't even tapped into yet. Here's how Facebook is going to make even more money in 2015 and beyond...
Facebook started monetizing Instagram this year, and research service eMarketer projects that Instagram will earn Facebook $595 million in mobile ad revenue in 2015.
In a little over two years, eMarketer projects Instagram's mobile ad revenue will reach $2.81 billion by 2017.
Instagram is a solid source of revenue now and in the future. But there's also two huge sources of revenue Facebook hasn't even tapped into yet...
Chief Executive Officer Mark Zuckerberg purchased virtual reality company Oculus Rift in March 2014 for $2 billion. While the move was criticized, just like Zuckerberg's $1 billion acquisition of Instagram, TechCrunch estimates the virtual reality market could see as much as $30 billion in revenue by 2020.
Facebook's Messenger service has also not been monetized yet. But Zuckerberg hinted last spring at a developers' conference that monetization is not far off, according to Business Insider.
Zuckerberg believes that monetization works best when there is an organic interaction between a business and its customers. He stated Facebook would eventually allow businesses to use Facebook's Messenger to send receipts and shipping updates.
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The FB stock price received several price target hikes today after the strong Q3 earnings. Barclays ($140), Credit Suisse ($135), and Morgan Stanley ($120) were a part of the handful of analysts who believe the FB stock price has room to run. Hitting those targets would be a gain of 22.52%, 19.65%, and 9.6% from today's opening price.
While Facebook's Q3 2015 earnings sent the stock soaring today, these other factors will propel the FB stock price higher through 2016.
Jack Delaney is an Associate Editor for Money Morning. You can follow him on Twitter and follow Money Morning on Facebook.
