Facebook's (NASDAQ:FB) stock price is driving higher lately, increasing more than 50% in the last 12 months. Its price is up partly because the company's fundamentals improved, and somewhat because the impact of negative headlines is fading. The tech stock has challenges ahead, to be sure, but if it can get past the legal and regulatory troubles without taking too much damage, it should be able to continue higher.

Facebook has already grown to reach over 2.4 billion monthly active users on its namesake platform and 2.8 billion on its family of platforms, which includes Instagram, Messenger, and WhatsApp. Here are a few ways in which Facebook can grow earnings that don't rely on increasing its user base.

employee wearing Facebook shirt while coding


Increase the average revenue per user

Continuing to increase the average revenue per user (ARPU) is a path to growth in earnings for Facebook. The ARPU is growing in all regions it operates in, with the fastest growth, in its most recent quarter, coming from the U.S. and Canada at 25%. Unfortunately for Facebook, government regulations such as the California Consumer Privacy Act (CCPA), which allow individuals to opt out of certain data collection practices, are decreasing its ability to display targeted ads. This type of regulation may expand across the globe, and Facebook must develop new ways to deliver value to businesses that choose to advertise on its platforms.

Facebook, which also owns Instagram but does not break out its numbers separately, is increasing the supply of ad impressions available. However, it must be careful to manage the supply of ads so it doesn't compromise the user experience. For example, if a user is shown too many ads during a site visit to Facebook or Instagram, the user may log on less often.

After multiple quarters of growing supply and raising price per ad simultaneously, it experienced a drop in the price per ad in its most recent quarter. The decrease in revenue per ad is also partly due to the type of ads shifting from the news feed to "stories," which do not generate as much revenue per ad. Marketers pay less per ad in this format because they are not as prominently displayed to individuals as they are in the news feed. However, the stories format has more significant potential for growth in the number of ads displayed.

Monetizing WhatsApp and Messenger are a couple of tactical decisions Facebook can make to increase earnings from its existent user base. The two apps count 1.6 billion and 1.3 billion, monthly active users, respectively, and provide a significant opportunity to generate revenue. Increasing the amount of in-message purchases and monetizing these transactions like the way Tencent's WeChat does is one idea.

Slow the growth of expenses

Facebook's expenses have been growing fast in the last few years as a result of several of its investments to increase the quality and safety of the user experience on its site. In the near term, management expects these investments to continue. If Facebook can limit its increase in costs, then more of the growth in revenue will trickle down to the bottom line.

If Facebook were to reach a level where there is no more user growth, then it may find opportunities to reduce expenses. First, it will not need to invest as much in computing power in preparation for an increase in users. Second, it can reduce initiatives it's undertaking in developing economies to generate more signups. For example, it's investing in Africa, where it is spending on infrastructure to provide internet access to populations who currently do not have it. According to The Wall Street Journal, the investment in Africa is not a philanthropic endeavor, and the decision to go forward is to acquire new users to its platform. If Facebook has tapped all possible markets, and if additional signups are not likely, even in developing economies, it can reduce such expenditure.

What this means for investors

Overall, Facebook has proven actions it can take to increase earnings without additional signups. It can take steps to enhance user interactions with its websites and each other, it can manage expenses, and it can monetize its other assets. Therefore, with over 2.8 billion monthly active users across its family of websites, generating efficiencies from its existing base is a powerful lever it can pull to increase earnings.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.