Is Facebook Ready to Take Off?

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

Facebook surprised everyone with a fantastic earnings report. The company showed that it's stronger than people think. Facebook looks ready to take off, but there is a short-term hurdle to clear. Over the next six weeks, a huge lockup period expires. More than 1.2 billion shares will hit the market. Most likely, the share price will drip as a result. And that will create a buying opportunity. One reason is that it's clear Facebook gets mobile, and will continue to invest in that growth. It's going to have to, because that's the future. And companies ranging from TripAdvisor to Google to Yahoo! all want to be there.

What also makes Facebook attractive is the other options it has going forward, such as its Open Graph initiative, its ad exchange, and all the things in its skunkworks. Facebook's hacker culture is valuable.

There are plenty of analyses out there that show Facebook is overvalued, much the same way investors think LinkedIn is overvalued. What they don't account for is the growth options that Facebook have given the size of its network. As those options come to pass, the stock market will take notice.

Facebook shares have performed poorly so far for most investors. But there are things every investor needs to know about this company. We've outlined them in our newest premium research report. There is a lot more to this company than meets the eye, so read up on whether there is anything to "like" about Facebook today. Access your report by clicking here

David Meier has no positions in the stocks mentioned above. John Reeves owns shares of Google. The Motley Fool owns shares of Facebook, Google, LinkedIn, TripAdvisor, and Yahoo! and has options on Facebook. Motley Fool newsletter services recommend Facebook, Google, LinkedIn, TripAdvisor, and Yahoo!. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 October 30, 2012, at 1:33 AM, Phaseiiia wrote:

    After seeing so many complete disastrous predictions form you two, I just had to register and comment.

    I have never seen such atrocious investment advice in my life. Im not talking about this article, but the SEVERAL you have put out. You two should be kept very VERY far away from stocks or any type of investments. You two know absolutely nothing about the field.

    Lets take a few examples:

    1) You said Pandora was a buy when it was above $12... it is now at $8

    2) When Zynga was at $5, you said it was a potential 10 bagger (LOL).. its now at $2.30

    3) Since the pps of FB was in the 30's, you guys have repeatedly put out pump articles recommending a buy

    The only reason I could see anyone reading the garbage you put out is to do the opposite of what you say.

  • Report this Comment On October 30, 2012, at 3:16 AM, somethingnew wrote:

    While I question their picks and ideas for their Rising stars portfolio, I like hearing these guys ideas and factoids. They led me to MM as an idea and even though they never officially added it, I researched it and bought into it and so far it has turned out very well. I think with anybody's analysis you have to take it with a grain of salt. Eat the meat and spit out the bone.

  • Report this Comment On October 30, 2012, at 4:43 AM, lee654 wrote:

    I seriously question this model going forward ? I think perhaps the greatest buy of any stock is Yahoo !! CEO Mayer, ideas, products and the team she has brought in from Google will take Yahoo to the top!! Yahoo has over 700 million customers, 10 billion in cash, Yahoo Japan worth 10 billion, Alibaba 23 billion in China and growing faster than Amazon and eBay combined.

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