3 Reasons to Buy Facebook

The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.

Despite some recent volatility in Facebook's stock, John and David feel there are three solid reasons to pick up shares in the social-networking giant. First, everyone seems sure that Facebook's revenue growth is slowing down, that mobile is a disaster, and that more companies like General Motors will stop advertising with them. All that anxiety is keeping the share price down. Second, people are underestimating Facebook's hacker culture. Like the folks at Google, John and David think it is being underestimated. Lastly, Facebook is going after big opportunities in advertising, such as installing a "Want" button, which would improve ad targeting, and an creating an "Ad Exchange." Better data and more users will hurt Microsoft's Bing and Yahoo!. John and David own shares of Facebook, and have been buying more for those very reasons stated above. They believe many people can't look beyond the next six months to see that Facebook is building itself into a powerhouse.

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David Meier has no positions in the stocks mentioned above. John Reeves owns shares of Google. The Motley Fool owns shares of Facebook, Google, and Microsoft. Motley Fool newsletter services recommend General Motors Company, Google, Microsoft, and Yahoo!. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On July 17, 2012, at 4:58 PM, Hestheone wrote:

    "...recent volatility in Facebook's stock..." are you friggin' kidding me? How much does it have to tank? The fundamentals are just not there to support anywhere near the optimism it would take to buy into the FB train wreck. Value is about tangible things like earnings, business model and reputation. FB has hype. 900 million email addresses and maybe 90 million active users (as opposed to the 810 million others FB claims, but who in reality check in once a month or so after a 30 day deluge of begging emails from FB itself). No ad revenue because no one clicks through. I would sooner buy a New York bridge than do anything with FB except go short for after the election in November.

  • Report this Comment On July 17, 2012, at 5:29 PM, Jamest297 wrote:

    You only have 3 reasons to buy Facebook. I have 19 reasons to run as fast as you can the other way when anyone even mentions Facebook. This business is a chimera. DO NOT BUY FACEBOOK AT ANY PRICE ABOVE $.11. It is a loser.

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