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This Social Networker's Story Has Only Just Begun

Over the past 10 years, social networking has made amazing progress and for industry giant Facebook (NASDAQ: FB  ) , the No. 1 priority has been about building up a massive user base. However, with more than 1 billion users and counting today, now it's all about engagement -- making sure that the users they have keep coming back for more.

How'd they do?
For its most recent quarter, Facebook defied the naysayers yet again with impressive top-line growth of 71%, which resulted in an almost tripling of the company's bottom line. And while the market was initially impressed with the numbers, the stock is actually down a bit since the report. But for Foolish investors who take the long view, there is plenty to like about where this company is headed.

Remember these numbers
If you take one thing away from Facebook's most recent quarter, it's these two numbers: 802 million and 609 million. These are the numbers of daily active users and mobile daily active users, respectively, and are signs that Facebook's engagement strategy is working.

Growth in daily active users is up almost 21% from the same quarter a year ago, and mobile is even more impressive with 43% growth. The fact that 802 million Facebook users check in on a daily basis is staggering. And considering that mobile advertising revenue accounted for 59% of total advertising revenue for the quarter (up from 30% a  year ago), it's plain to see how important the mobile frontier is for Facebook. The slides below from the earnings presentation tell the story:

Source: Facebook

Less than enthusiastic
The market's short-term, muted reaction to the results could be the product of anything, really. Facebook shares aren't what you would call cheap by traditional metrics. And the company also plunked down a lot of money in recent acquisitions of WhatsApp and Oculus. The lack of clarity as to what they're going to do with those purchases adds a little uncertainty to the mix.

But here's something to keep in mind: Mark Zuckerberg is just getting ready to turn 30 years old, and Facebook is likely to be a decades-long story. So while it's easy to get sucked into the short-term noise with any investment, do yourself a favor and stretch your investing timeline out with this one. Facebook is only 10 years old this year. I have a feeling this story has only just begun.

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  • Report this Comment On May 13, 2014, at 11:31 AM, Sammy100 wrote:

    Very True: The story has only just begun folks. They are making 2+ Billions per quarter! FB will not fade and is used by everyone I know in the "adult world" advertisers want to be there and they will continue to do so. I am holding this one for a very long time! Its the only stock I trust to do so. I will load up on the big dips.

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Jason Moser

Jason A. Moser is an analyst for Motley Fool One. He finds stocks that make money and tells the world about them. He's also won a Buzzy. And an Awessie.

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