Facebook shares have risen about 3% over the last six months, largely due to weaker guidance for the second quarter of 2015 in the face of a stronger U.S. dollar. However, the company is still valued at a whopping $230 billion, which is completely justifiable, according to Canaccord Genuity analyst Michael Graham.
"We believe Facebook's fundamental outlook remains positive, underpinned by multiple revenue drivers that span both the near and long term," Graham wrote in a research note on Wednesday morning.
Graham, who rates Facebook as a buy with a price target of $90, laid out his argument in favor of Facebook's current valuation, citing strong growth and continued opportunity.
For one, Facebook continues to increase its monthly active users by more than 10% every quarter, with growth at 13% in the most recent quarter. Daily active users grew even faster at 17% in the last quarter. This, paired with ComScore numbers that show time spent on Facebook continually increasing, indicates increasing engagement on the platform, despite the fact that Facebook already has such a large user base.
Graham also argued that Facebook has a lot of room to grow ad revenue even though its ad numbers are already pretty healthy.