RBC's Mark Mahaney Considers Facebook To Have 'One of The Best Growth Dynamics,' Despite Target Price Cut

Facebook Inc FB posted better-than-expected fourth-quarter results, but the company’s spendings were a cause of concern for many investors. Following the results, Mark Mahaney, managing director at RBC Capital Markets reiterated his Outperform rating on the stock, but reduced the target price from $94 to $92.

Mahaney was on Bloomberg recently to discuss the company’s results.

Related Link: Analysts React Positively To Facebook Earnings

Facebook's Growth Dynamics

“The biggest single trend in consumer Internet is the switch towards mobile devices,” Mahaney said. “Facebook was a little bit behind three years ago. Facebook caught up two years ago. And Facebook today is ahead of the curve. They have got – when all was said and done, when the quarter was all printed – they probably have one of the best growth dynamics both top line and the bottom line in the Internet sector.”

Why The Sudden Increase In Spending On R&D?

“I think, when they were first a private company, they thought they could run it much more leanly than everybody else in the valley,” Mahaney said.

“I think they learned from their mistake and realized, 'no, you actually got a heavy up' you got to bring in a lot more researchers, R&D people, sales and marketing people.' Why? Because this platform has become a lot bigger than they thought. They got to develop new revenue streams, videos, monetize Instagram. It requires more people, more resources.”

When asked what R&D challenge Facebook is facing, Mahaney replied, “I don’t think there’s an R&D challenge, per se. It’s just if you want to go from a 1.5 billion and there probably be over 2 billion people worldwide if you add up all the properties [sic.].”

“There’s a lot of different ways you can go with these [people].”