For years, I’ve been touting the huge upside potential in Facebook (NASDAQ:FB) if and when management figured out how to execute against the company’s enormous opportunity in e-commerce. It appears the time has finally come. The implications for FB stock are huge.

Facebook is finally making its big push into e-commerce, with a variety of newly launched features which, in sum, create a foundation for a robust, end-to-end online shopping platform at scale.

Given current consumer behaviors, my numbers suggest that Facebook’s e-commerce business could one day be as big as its digital advertising business, and that in tandem, these two businesses could push Facebook stock all the way to $800 by the end of the decade.

So, with the FB stock price today around $280, I say buy, and hold for the long haul.

Here’s a deeper look.

E-commerce and FB Stock

Facebook has an undeniably enormous opportunity in e-commerce.

The company’s ecosystem of digital platforms — Facebook, Instagram, Messenger and WhatsApp — constitute the internet’s version of “town hall.” Everyone is on them. Literally… everyone. Around 3.2 billion people access at least one of those platforms every single month. Ex China — where Facebook is blocked — there are less than 4 billion internet users on the planet.

So if you’re on the internet, you’re in the Facebook ecosystem.

This global ubiquity means that if brands want to promote products and services, they need to do so through the Facebook ecosystem. More than 180 million businesses use Facebook’s ecosystem to connect to consumers.

Because every brand is promoting products and services through the internet’s town hall, consumers are now looking towards Facebook’s digital properties as the best place on the internet to discover new products and services.

According to a 2019 Facebook survey, 83% of Instagram users use the platform discover new products or services. 81% use it to research new products and services. 80% use it to decide whether to buy a product or service.

In other words, as a natural extension of being the internet’s town hall, Facebook is now the world’s largest digital product and service discovery channel.

All Facebook has to do to turn into a huge e-commerce giant is turn that discovery into action.

The Big Push

For years, Facebook had made small, half-baked attempts to jump into the e-commerce game.

In 2020, though, sparked by the Covid-19 pandemic accelerating the e-commerce revolution, Facebook has finally started to make its big, all-out push into the space.

In May, Facebook launched Shops, a sell-side platform that enables select business to turn their Facebook and Instagram pages into online stores, with product listings and checkout ability.

Then, in July, Facebook started testing a Shop tab for Instagram, which essentially created a dedicated section for consumers to browse “shoppable” products and services on Instagram.

In August, Facebook started testing a similar Shop tab for Facebook.

Next month, Facebook plans to expand Shops to any eligible businesses and include customization features, such as the ability to change how their online store looks, connect with consumers through Messenger and Instagram Direct, and sell directly through Live streams.

Also next month, Facebook plans to expand Checkout on Instagram to all U.S. businesses and creators, creating a fully, end-to-end shopping experience with native in-app payment processing through Facebook Pay.

That’s a lot of moves. And they’re big moves.

In sum, they finally create a formidable foundation upon which Facebook can strongly convert all those consumers using Facebook/Instagram to discover products and services, into shoppers, and ultimately create a giant e-commerce marketplace.

Enormous Upside Potential

This could be the beginning of Facebook creating an e-commerce business which rivals its digital advertising business in size.

The market here is huge.

Total retail sales will measure about $23.5 trillion in 2020. That number has been growing at a steady ~5% pace excluding recessions, mostly because of inflation, globalization, urbanization and population growth.

Meanwhile, total e-retail sales in 2020 will measure about $3.9 trillion, or about 16.6% of total retail sales. That number, too, has been rising steadily by roughly ~200 basis points per year, thanks to digitization trends.

Both of these trends will persist. As they do, global retail sales will like measure around $40 trillion by 2030, with about 35% of those sales (or $14 trillion) happening online.

So Facebook is really attacking a $14 trillion e-commerce market here.

How much of that market can Facebook grab?

A lot. This is already the world’s largest product discovery channel in the digital channel. Management is strongly executing on turning that discovery into shopping. Why, then, can’t Facebook turn into one of the biggest e-commerce platforms on the planet?

The company can.

The leading e-commerce platforms in the world have about 10% market share. Assuming Facebook gets there, you’re talking $1.4 trillion in gross merchandise value flowing Facebook in 2030. Based on a 5% take rate, that implies $70 billion in revenues.

Facebook did $70 billion in digital ad revenue last year.

Facebook Stock to $800?

Baking e-commerce upside potential into my model, I see FB stock rallying all the way to $800 by the end of the decade.

Here’s the math.

As the e-commerce business ramps to $70 billion in revenues by 2030, the digital ad business continues to expand market share in the digital ad market thanks to expanding ad real estate across Stories, Messenger and WhatsApp. On the back of that market share expansion, Facebook’s digital ad revenues will grow at a 10%-plus pace to $260 billion by 2030, equating to total revenues of $330 billion.

At the same time, operating margins should return to 40%-plus levels over the next several years as big data security investments phase out and sustained large revenue growth drives positive operating leverage.

Putting those two together, my modeling suggests that Facebook’s earnings per share will rise towards $20 in 2025, and $40 in 2030.

Interactive media stocks normally trade around 20-times forward earnings. Based on that multiple, $40 in 2030 earnings per share implies a 2029 price target for FB stock of $800.

Bottom Line on FB Stock

Facebook is a long-term winner, and the company is finally making a formidable, all-out push into e-commerce, which represents a compelling long-term opportunity for the digital ad giant.

Plus, there’s a huge near-term catalyst for FB stock on the horizon in the form of Instagram Reels.

And the whole market is falling head over heels for tech stocks.

Oh, and the stock is still pretty cheap, especially relative to peers.

So why not buy FB stock?

I can’t think of a reason.

Buy FB stock. Hold for the long haul.