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Facebook, Inc. is Betting You'll Buy What You Like

A not-quite-perfect mockup of the Facebook "like" button. Credit: Wikimedia Commons.

Amid a strong quarter in which the social network saw mobile usage zoom to new highs, Facebook  (NASDAQ: FB  ) is testing new ways to keep you engaged with the site.

Two experiments, in particular, should have Facebook investors interested. First is a "buy" button that gives users who "like" a product the ability to buy it from within a newsfeed. Second is a "save" button for squirreling away content that is interesting but which you'd rather return to at a later point. Both features could get users back on the site more often.

A well-timed trial
The timing couldn't be better. Facebook's operating income more than doubled in the second quarter on a 61% increase in revenue. What's more, the company is on pace to generate significantly more cash flow from operations in 2014 than is needed to run the business -- $5 billion at the current pace. CEO Mark Zuckerberg and his team have plenty of capital to try new things.

And they have good reason to do so. Recent Forrester Research findings conclude that teens are not only coming back to Facebook, they're also more likely to engage with mobile ads. A sharp increase in the company's advertising revenue from mobile devices in the second quarter speaks to this trend. In that quarter, Facebook derived 62% of its advertising sales from mobile devices, up from 41% in the year-ago period.

The "save" button could boost those numbers by making it easier for teens and other users to engage with a variety of content shared on the platform.

Meanwhile, the "buy" button could help win more business from independent workers and small businesses. Authors, for example. (NASDAQ: AMZN  ) has taken a PR hit over stingy payment terms for self-published works available via the Kindle Unlimited streaming service. Authors seeking better terms could do well adding the "buy" button to a Facebook page, spurring sales to fans who "like" their work.

What to do now
At least that's the theory. For investors, the takeaway here is that Facebook isn't satisfied with its current mix -- even as it produces hypergrowth in key areas of the business. That's a good sign. And yet, with a market cap of $192.5 billion and trading for 97 times trailing earnings, this is no cheap stock. So if you buy here, nibble. Add a bite at a time while taking advantage of short-term sell-offs.

All signs point to Facebook as a stock worth owning for the very long term. There's no need to rush a buy, especially with enthusiasm taking the stock to record highs.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

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Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

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Tim Beyers

Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at or send email to For more insights, follow Tim on Google+ and Twitter.

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