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TheStreet Open House

Facebook Flap Overblown -- Massive Growth Lies Ahead

As Facebook works on producing revenue outside of traditional advertising, payments will play a major factor. Revenue from "payments and other fees" was $186 million in the first quarter, doubling from a year earlier. As such, Martin is optimistic about this revenue segment over time.

Developers should be able to generate value from Facebook's global reach, as Zynga (ZNGA) has, through so-called revenue credits. Martin even says PayPal, owned by eBay (EBAY), and credit card companies could lose revenue to Facebook credits over time.

Martin also notes that Facebook's margins are likely to grow exceptionally fast, as it is a fixed-cost business. This will allow earnings to rise faster than revenue, which may lead to upside in the stock price. As advertisers continue to move advertising online and the company's e-commerce initiatives take off, this is likely to improve Facebook's revenue over time.

There are several caveats to investing in Facebook, Martin says. The major risks to her price target include fatigue, privacy concerns, advertising seasonality, mobile, and its relationship with Zynga and others that may impede Facebook's meteoric rise.

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