3 Reasons Facebook, Inc Stock Could Rise

In some investors' minds, Facebook's "missing" revenue estimates and only narrowly beating non-GAAP (excluding one-time items) earnings-per-share expectations were red flags. Perhaps the social media king's history of phenomenal growth is coming to an end? At the same time, some analysts have since raised their price targets over the vaunted $100-per-share threshold.

The split camps aren't necessarily surprising, considering Facebook didn't report blowout financial results in Q1, something many have come to expect. Which side of the fence should investors stand after Facebook's mixed results? There are several compelling reasons to run with the bulls, just as there were prior to Facebook's earnings news.

A quick recapThe revenue miss shareholders endured in 2015's Q1 was all of $2 million: the Street was expecting $3.56 billion in sales, and Facebook delivered $3.54 billion. For those keeping score at home, the $3.54 billion in revenue was a 42% improvement over 2014's first quarter. Not bad, but in some folks' minds "not bad" doesn't cut it for Facebook any longer.

Just as with its primary digital advertising competitor Google , Facebook generates a significant portion of its total sales overseas, and the "foreign exchange effect" hit hard last quarter -- to the tune of $188 million. In other words, if not for the strong dollar, Facebook Q1 revenues would have been $3.73 billion, or 49% above last year.

Non-GAAP earnings-per-share of $0.42 narrowly beat forecasts, but it was Facebook's monthly average user (MAU) growth and its impressive mobile presence that won the day. Even at its mammoth size, Facebook added 50 million new MAUs, and now boasts 1.44 billion. Perhaps even more telling is that 1.25 billion users are accessing Facebook via their mobile devices, which speaks directly to one of the reasons Facebook stock could rise.

Mobile ads are the futureFacebook COO Sheryl Sandberg sounded almost giddy when discussing both past mobile ad results, particularly video spots, and what the future holds in this strategic area. Unlike Google, which is just beginning to grasp the "mobile first" mantra in terms of its ads and search functions, Facebook targeted mobile years ago, knowing that users on-the-go still want to enjoy their videos.

Much of the increased spending Facebook has incurred -- overhead skyrocketed 83% last quarter -- and will continue to take on, as per CFO Dave Wehner, is for developing and refining tools related to mobile video ads. Unfortunately, Facebook wouldn't break out video or mobile video ad revenues specifically, but Wehner did say they were performing extremely well.

The elephant(s) in the roomWehner deflected questions regarding when Facebook would release its highly anticipated Oculus virtual reality (VR) headset Rift to the masses-- and how many it would release -- putting a damper on rumors of an imminent rollout. However, like Facebook's eventual monetization of Instagram, as well as the fast-growing WhatsApp messaging service with its recently announced 800 million MAUs, Rift is a revenue driver. It's just a matter of when.

None of the big three sales opportunities will appease short-term investors in search of a quick stock price pop, but for those with longer time horizons, all three offer tremendous potential. Industry pundits have recently suggested WhatsApp could generate $7 billion in annual revenues, and Instagram could become a $35 billion business unto itself.

Don't forget the "little guy"During Facebook's conference call, Sandberg alluded to the 30 million small and medium sized business (SMB) pages on Facebook, yet it "only" has two million marketing partners. Considering much of Facebook's ad revenues are derived not from the big brand names but rather SMBs, Sandberg correctly pointed out that that equates to a world of opportunity.

National SMB workshops and continually improving ad tools like its LiveRail publishing monetization platform should continue to drive Facebook ad sales in this key marketplace. Having two million marketing partners is a good start, but Facebook knows there are 28 million additional SMBs to bring onboard.

Will these growth drivers be enough to push Facebook to the $105 a share range, as per a recent analyst price target increase? Only time will tell, but for long-term investors there are simply too many avenues for growth to bet against Facebook, despite the current malaise.

The article 3 Reasons Facebook, Inc Stock Could Rise originally appeared on Fool.com.

Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.