Facebook Inc (NASDAQ:FB) is one of the only stocks worth owning right now. Not only is the social media company up 6% year-to-date in a down market, it’s also up nearly 20% in the past six months vs. a double-digit decline for the S&P 500 in the same period.
Furthermore, Facebook earnings show a stock that is still going strong despite an already dominant business. In Q4, FB stock saw $5.84 billion in revenue to trounce Wall Street estimates of just $5.37 billion. Earnings of 79 cents also handily beat forecasts of just 75 cents.
Even more impressive for Facebook stock is its continued growth in users despite roughly 1 in every 5 people in the world logging on once a month already. Specifically, at the end of December, Facebook monthly active users hit 1.59 billion, a 14% increase year-over-year.
FB stock has plenty of haters, but how can you not like this company with metrics like that?
The bears need to just shut up and put their money in Facebook — because this market may not go anywhere in 2016, and FB stock could be the best investment option in an otherwise crummy environment.
FB Stock Keeps Proving Naysayers Wrong
Click to Enlarge The admission that Facebook stock is unbeatable isn’t one I came to easily. Back in 2014, I panned FB stock on the notion that it simply couldn’t get much larger and that its lucrative Western audience would falter.
That proved quite the boneheaded call, as the social media megacap continued to monetize its core users at a much better rate and continued to briskly expand its user base.
The expansion speaks for itself, but that increase in its “average revenue per user” metric over time is what is really impressive. Consider that a year ago, the ARPU in the U.S. and Canada was $9 and in the latest earnings it was $13.54 for an amazing 50% jump in this key metric.
Also impressive are metrics worldwide, where overall revenue per user hit an average of $3.73 in Q4, up 33% from $2.81 a year ago.
When you continue to grow users and continue to make more money from those users, that’s the recipe for success — both in the near-term on strong earnings and in the long-term with a dominant business that has staying power.
Facebook Is the Gold Standard of Advertising
The source of this surge in fundamentals for FB stock is, of course, advertising.
As Facebook gets even better at targeting its users and demanding a premium price for the ads it serves, it is increasingly becoming the go-to source for marketers. Consider that in Q4 2015, advertising revenue was 5.64 billion, a surge of 57% year-over-year and more than offsetting a decline in other fees.
Anyone who works with direct response marketing or in media knows that Facebook is king right now because it has figured out how to “crack the code” and align businesses with prospective customers.
For the longest time, Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) held that title because of its dominance in search and its sophisticated algorithms to target specific Internet users with very specific advertising. But in this age of increased scrutiny over privacy, Google has had trouble. Users are getting savvier about things like cookies and how the Internet works, and many browsers block personal information from websites.
But Facebook is predicated on personal information like your age, location and who your friends are. Even if you block your browser from knowing about you, Facebook knows — and can serve you ads accordingly.
Advertisers pay a premium for this kind of info, because it allows them to spend their money more effectively on the “right” people. Say you’re an e-commerce company that sells Carolina Panthers hats. Using Facebook to find 29-year-old males living in Charlotte, N.C., is a heck of a lot more effective than simply buying ad inventory everywhere, right? Ultimately, that targeting allows you to spend less money and get better results.
Facebook also has pretty amazing performance tools that allow advertisers to see what’s working and what’s not, optimizing their efforts for maximum impact on their bottom line.
Make no mistake: It’s great to see momentum behind Facebook stock right now … but it’s this power in the advertising and marketing world that is really the reason to buy FB stock.
Because with more than 1.5 billion users worldwide and a dominant platform, there really is no way Facebook can lose.
Its earnings just proved that, so it’s time to get on board.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.
