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.

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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, 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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Originally published