The Facebook stock price today (Wednesday) dropped 0.73% in intraday trading, but the drop should not be a cause for concern for investors.
Because of the short trading week, investors generally don't add new positons. Many investors will actually remove holdings from portfolios.
Hedge funds and large investors who bought into the Facebook stock price at its 52-week high of $110.65 can actually write off the losses on their tax returns if they sell before 2016. The sell-offs and lack of action in the stock market are making the FB stock price drop today.
Despite the small losses in the Facebook stock price today, we are still very bullish on FB stock heading into 2016.
In fact, Money Morning Defense & Tech Specialist Michael A. Robinson lists Facebook as one of the best tech stocks to buy in 2016...
"CEO Mark Zuckerberg was always out to make his company into a massive global force," Robinson stated. "He began with a simple idea: Once folks' friends were on Facebook, they'd feel compelled to be there, too. And that idea made possible the engine that drove Facebook - 'viral' growth."
- Acquire a total of 1.55 billion monthly active users (MAUs), which is larger than the entire population of China
- Beat Wall Street's revenue expectations 12 out of the last 13 quarters
- Report year-over-year revenue growth since 2012
- Propel the Facebook stock price 175% higher than its IPO price of $38 per share
And even with all of the success, Facebook is still aggressively growing...
In 2015, Facebook purchased speech-recognition company Wit.ai, a video compression company called Quickfire, an e-commerce company called TheFind, and two augmented reality companies called Surreal Vision and Pebbles.
And this aggressive growth is why Money Morning readers shouldn't focus on the Facebook stock price today, but instead focus on the bigger picture. Facebook is turning into an unstoppable force...
The Facebook Stock Price Today Is Down, but It Will Climb Higher in 2016
The two big reasons why FB stock will climb in 2016 are Instagram and Oculus Rift.
In 2012, Zuckerberg purchased mobile picture app Instagram for $1 billion in Facebook stock and cash. Zuckerberg was criticized at the time, as Instagram only had 30 million users and did not make any money.
But Zuckerberg knew Instagram's potential even if Wall Street couldn't see it...
Instagram is expected to earn roughly $600 million in ad revenue in 2015. The research firm eMarketer projects Instagram will earn $2.81 billion in global mobile ad revenue annually by 2017.
And aside from the ad revenue, Instagram keeps younger social media users within Facebook's holdings.
You see, younger users have been leaving Facebook over the past several years, according to a research study by asset management firm Piper Jaffray.
When teens were asked what the most important social network was to them in 2013, 33% stated Facebook. In 2015, that number has fallen to 14%. But Instagram was considered the most important social network to teens in 2015, with 32% saying Instagram was most important to them.
Combined, 46% of teens preferred either Facebook or Instagram over rivals like Snapchat.
Even though it is true that Facebook may not appeal to teens as much as it did in the past, younger users are still using a site that Zuckerberg owns.
Facebook and Instagram will bring in billions of dollars in ad revenue in 2016, but Zuckerberg also has a physical product to sell in another billion-dollar industry...
In 2012, Facebook purchased virtual reality company Oculus Rift for $2 billion.
Critics questioned how this would add to Facebook's bottom line, but Zuckerberg once again proved his ability to identify opportunities.
Research firm CCS Insight projects that the augmented and virtual reality device market will be worth $4 billion by 2018, twice the amount that Zuckerberg paid for the Oculus VR.
While virtual reality is heavily associated with video games right now, Zuckerberg has grander ambitions...
"After games, we're going to make Oculus a platform for many other experiences," Zuckerberg stated in a Facebook post. "Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world, or consulting with a doctor face-to-face - just by putting on goggles in your home."
Facebook has yet to announce an exact release date for its virtual reality headset, but Zuckerberg stated it will be available at some point during Q1 2016.
The Bottom Line: The Facebook stock price today is down, but that's only because of the short trading week before New Year's Day. Because of Zuckerberg's ability to innovate and add new sources of revenue, the Facebook stock price only has room to climb in 2016. It is one of the best tech stocks to purchase before 2016.
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