It’s been a fine quarter for big-cap tech so far. Facebook Inc (NASDAQ:FB) continued the trend with a blowout third-quarter report on Tuesday afternoon, after fellow “FANG stocks” Alphabet Inc (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN) each crushed expectations last week.

The FB stock price actually is down a bit over 2% in trading Thursday, but given a 59% gain YTD, some investors may have seen the good news as an opportunity for profit-taking.

From a long-term standpoint, Facebook earnings look like nothing but good news. The company’s global reach is astounding. Its growth is spectacular. And, believe it or not, FB stock really isn’t that expensive on an earnings basis.

The stock may need to take a breather in the near-term. But I continue to see FB as one of the most attractive stocks in the market, and nothing in the Q3 report changes that view.

Facebook’s Impressive Numbers

Facebook’s third quarter numbers were well ahead of consensus estimates. Revenue of $10.33 billion rose 47% year-over-year, against Street estimates for a 40.3% increase. Earnings per share reached $1.59, a whopping $0.31 ahead of analyst projections, and up a stunning 70% year-over-year.

It’s simply a huge beat, even if a lower than normal tax rate (10%) did help net income and EPS figures. But below the headlines, the Q3 report details some figures about Facebook that are simply amazing.

• DAUs (daily active users) rose to 1.37 billion, up 16% year-over-year. That figure is 18% of the entire world’s population. In the last year, the company has added roughly 190 million DAUs. Snap Inc (NYSE:SNAP) closed its Q2 with 173 million – total. Twitter Inc (NYSE:TWTR) has even fewer.
• According to the post-earnings conference call, Instagram, which Facebook really hasn’t monetized yet, has over 500 million daily users – triple Snap and likely four times as many as Twitter.
• Facebook’s operating margin hit 50%. The figure in Alphabet’s Q3 was 28%. Amazon’s operating margin over the last twelve months is just 2%.
• Facebook closed the quarter with over $38 billion in cash and no debt.
• Finally, mobile advertising revenue drove 88% of the total. That’s an impressive figure given that it was fears about mobile monetization that led the Facebook stock price to fall by more than half after its 2012 IPO. FB stock has climbed almost 1,000% from those lows.

The numbers quite literally are unprecedented. And they show just how tremendous Facebook’s reach is — and just how profitable the company can monetize that reach.

Why Did FB Share Price Fall After-Hours?

Potential profit-taking aside, there is a clear reason why FB stock gave back its initial after-hours gain. That profitability may take a hit going forward, as expenses are going to rise.

Clearly, CEO Mark Zuckerberg had a point to make. He was quoted in the earnings release as saying:

“We’re serious about preventing abuse on our platforms. We’re investing so much in security that it will impact our profitability. Protecting our community is more important than maximizing our profits.”

Zuckerberg emphasized that point by detailing those efforts in his prepared remarks on the call. CFO David Wehner gave more color from a fundamental perspective, projecting operating expenses to rise 45-60% in 2018, against lower-than-expected 35-40% growth this year. Both security investments and efforts to drive video content are fueling the increase.

Combined with an expected deceleration in revenue growth, Wehner projected a “net negative” on 2018 operating margin. Meanwhile, the tax rate for next year was initially guided to “the mid-teens”, itself a likely headwind to net income growth.

The margin compression isn’t necessarily a surprise. Analyst estimates before the quarter projected just 22% EPS growth on 30% revenue growth – so some compression was expected.

But the spike in spending appears larger than some expected. And with the company in the process of testifying in front of Congress over Russian-backed “fake news”, the security spend, in particular, likely isn’t a one-time event.

As such, profit growth expectations might need to be tempered – and the same may be true for the FB stock price.

FB Stock Remains a Buy

Even with those concerns, however, I’m sticking to my long-held bullishness toward Facebook stock. Even if 2018 estimates come down, FB still is trading at around 25x 2018 EPS plus the cash on its balance sheet. It’s not a multiple that requires the 70% growth posted in Q3 to continue.

And even if Facebook ad revenue decelerates, there are still profit drivers here. There are 500 million Instagram users to monetize. WhatsApp is next. 20 million businesses are using Messenger to communicate with customers, per the call.

There’s still too much good news here to get nervous now. Facebook reaches roughly a quarter of the world – and still is growing double-digits. While prices at Twitter and Google are falling, Facebook’s rose 35% in the quarter, as demand for its ads outpaces even its ample supply. And, again, the stock is not that expensive from an earnings basis.

Thursday’s trading has seen a pullback in FB stock. But that pullback likely represents a buying opportunity – just like every other pullback over the past five years. This is a dominant company at a reasonable price – what else do you need?

As of this writing, Vince Martin has no positions in any securities mentioned.