RBC's Mark Mahaney Says The Street's Estimates For Facebook Will Go Up And So Will The Stock

Facebook Inc FB is scheduled to declare its second-quarter earnings on July 29. RBC' Mark Mahaney was on CNBC recently to discuss why the company's won't disappoint with its results for the quarter.

Facebook Is In A Sweet Spot Now

"With Facebook and Facebook is one of our top 3 picks," Mahney said. "With a 12-month outlook we like Amazon.com, Inc. AMZN first, its been our top pick since the beginning of the year. Facebook is number 2 and LinkedIn CorpLNKD is number 3. But just looking just at the quarter, Facebook is really in a sweet spot now. So, they have really kind of figured out mobile and social and you are getting this really large influx of TV ad budgets migrating over to the internet."

He continued, "That's why the [upfronts are weak] and a lot of those dollars we think are going to Facebook. We don't think we are going to see the kind of deceleration that's in the Street's estimates for Facebook for the balance of the year. We think the estimate goes up and the stock goes up."

Facebook Is Spending Appropriately

On whether the 'aggressive spending' that Facebook warned investors about last October affecting the company's numbers, Mahaney said, "No, we don't and by the way, I think, that the aggressive spending is absolutely appropriate for a company that's still relatively small. $10 to $15 billion a year in annual revenue with a lot of new growth areas ahead of it. They have got to monetize instagram, they have got these communications networks like WhatsApp. "

By all means invest heavily now, you don't want to ramp up margins and then have to figure out investments later. This is the time to invest, they are doing it appropriately," Mahaney concluded.