NEW YORK (TheStreet) -- Shares of Facebook (FB) were slumping in early afternoon trading on Thursday, as the company expects ad load to "play a less significant factor driving revenue growth after mid-2017," the company's CFO David Wehner said during the 2016 third quarter earnings call on Wednesday afternoon.
Facebook expects ad revenue growth rates to "come down meaningfully," Wehner added. The company also expects 2017 to be an "aggressive" spending year and for capital expenditures to grow "substantially."
These comments reveal a common trend at Facebook, Mizuho Securities analyst Neil Doshi said on CNBC's "Squawk Alley" on Thursday morning. The firm has a "buy" rating and $146 price target on the stock.
"We've looked at past earnings reports and transcripts from the past four years, and every year they've used the words 'meaningful investment' or 'significant investment.' And every year they've come out with a set of operating expense guidelines and they've always done better than what their initial guide was," he explained.
The firm expects Facebook to come out with a "fairly aggressive" operating expense budget at first, and then to lower that guideline as the year passes and it "executes well against [it]," Doshi said.
In addition, investors should consider how both Alphabet's (GOOGL) Google unit and Amazon.com (AMZN) have done after seasons of increased investment, he said. "When Google and Amazon both went into deep investment modes, they've come out significantly better."
For example, Google came out with Android software, and Amazon.com came out with Amazon Web Services, he noted. "Facebook could probably give a little bit of that margin up and come out significantly further ahead in terms of social, messaging and video."
Looking forward, eSports could be a "big opportunity" for Facebook to tap into since it has a "great" platform for both sharing and watching content, he said.
(Alphabet and Facebook are held in Jim Cramer's charitable trust Action Alerts PLUS. See all of his holding with a free trial here.)
(Amazon.com is held in the Growth Seeker portfolio. See all of the holdings with a free trial.)
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings team rates Facebook as a Buy with a ratings score of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that the team rates.
You can view the full analysis from the report here: FBFB data by YCharts