5 Reasons Facebook (FB) Stock Is STILL a Screaming Buy!

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I’ve lauded Facebook Inc (NASDAQ:FB) stock before. In November, I identified two things — a service aimed at taking on LinkedIn Corp (NYSE:LNKD), and a news feed strategy virtually guaranteed to boost ad revenue — that would drive FB stock higher over the next several years.

Facebook FB Stock STILL best stocks to buy todaySince then, Facebook stock is up about 8%. Sure, that’s not exactly amazing, but it is 3 percentage points better than the S&P 500’s return over the same period.

Things have changed since November, and instead of just two catalysts that can propel FB stock higher, I now see (at least) five catalysts that make me a Facebook bull.

Let Me Count the Ways

The network effect is a powerful phenomenon, and easily the strongest competitive advantage FB stock enjoys right now. All five of the following catalysts either utilize Facebook’s extensive network of connected users or amplify it, making it even harder for competitors to mimic.

1) Video calling through Facebook Messenger

Apple Inc. (NASDAQ:AAPL) and its FaceTime feature has been the leading player in mobile video calling for a number of years now, and with Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL) Hangouts and Skype by Microsoft Corporation (NASDAQ:MSFT) in the game, it’s about time FB stepped up to the plate.

Facebook Messenger, which has more than 600 million users across the globe, is rolling out the ability to video chat, as well as soliciting developers to make apps within the service. FB is reportedly considering adding games as well, in efforts to make users stick around a little longer.

2) Search

Yes, search. Users around the globe conduct more than 1 billion Facebook-related searches every day, so in an effort to keep users on its site, FB has been building out its search capabilities for well over a year now. With a new collaboration between GOOG and Twitter Inc (NYSE:TWTR) to incorporate tweets more actively in Google search results, the lines between social and search increasingly blur — and Facebook’s taking notice.

If Facebook can eat up even a modest portion of Google’s market share, FB stock will respond more than favorably from the significant revenue growth.

3) Internet.org

While FB continues to improve at monetizing its existing base of 1.44 billion users, it’s naturally still trying to increase its user base. That’s difficult to do, because the percentage of internet-connected people in the world that aren’t already using Facebook is dwindling.

The solution? Give more people the internet, of course! Internet.org aims to do just that, connecting the unconnected across via drones, satellites and lasers. FB plans to test one drone the size of a 747 later this year.

While the upfront costs of such a project might seem extravagant, consider the long-term perk for FB stock: an increasing number of lifetime Facebook users across the world, and an ever-increasing network effect that would take its most ambitious rivals years, perhaps even decades, to develop.

Sure, the marginal customer acquisition costs will be far higher for the next 1.4 billion users than the first 1.4 billion, but FB wouldn’t pursue Internet.org if it didn’t think substantial revenues would follow.

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4) Instant Articles

In contrast to Internet.org, “Instant Articles” is essentially just a switch FB flipped, producing results overnight. Instant Articles should bring more ad revenues and keep users on Facebook longer.

Instant Articles, when clicked upon, will load within the News Feed itself, instead of sending readers to a third-party site, reducing the average load time significantly. Not only does this keep users engaged and on Facebook’s site, but FB will take 30% of ad revenues for any ads utilizing its powerful Audience Network ad technology.

Publishers have the option to sell and serve the ads themselves and keep 100% of the ad revenue as well, but without Facebook’s hyper-targeting tools, most publishers would likely be stepping over dollars to save pennies.

5) Instagram Ads

The fastest-growing social network on the web, Instagram, is now the “most important social network” among American teens as well. Good thing FB already bought Instagram for a cool $1 billion back in 2012.

With Instagram finally rolling out ads on its platform, and, just this month, making them actually clickable, Instagram should finally start monetizing meaningfully. This sort of thing is delicate, of course, as FB doesn’t want to see Instagram users flee from the service due to a constant barrage of ads ruining their experience.

Facebook knows a thing or two about managing the monetization of social networks, and it’s applying that experience to Instagram, where ads are rolling out slowly to its 300 million monthly active users.

In short, Facebook is deploying a number of strategies — some evident in the short-term, others taking a long-term perspective — that should do nothing but propel FB stock higher going forward.

FB stock is still a screaming buy.

As of this writing John Divine held no positions in any of the stocks mentioned, because he has other stocks in his portfolio that are screaming louder. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.

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