Actually, Facebook is getting it right, pro says

Buy Facebook's dip? Mahaney says yes
Buy Facebook's dip? Mahaney says yes

It seems most investors did not "like" Facebook's third-quarter earnings results, in which the social network projected slower revenue growth in the fourth quarter and announced plans for a big spending increase in 2015, sending shares sharply lower in mid-morning trade on Wednesday.

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To analyst Mark Mahaney, though, Facebook's stock is very attractive at current levels because the social media company's grand investment plans shows it's actually "doing the right thing."

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After all, Facebook had long been operating on "very high margins," Mahaney, managing director of RBC Capital Markets, said Wednesday on "Squawk on the Street."

Its earnings before interest, taxes, depreciation, and amortization, for example, a measure of the company's financial performance, has been between 50 and 55 percent, he noted. In other words, it has a very large operating cash flow.

"Our concern was that they weren't investing enough. So we think they're doing the right thing here both near-term and long-term in terms of increasing their levels of investments in 2015," he said. "These margins should come down and they've got a lot of really interesting growth opportunities."

Facebook could enjoy a number of other growth opportunities, too, Mahaney said, including the monetization of mobile video, photo sharing app Instagram and instant messaging service Whatsapp.

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"They should be spending more. They're doing the right thing," Mahaney said. "We're buyers of this dip for that reason.

Mahaney currently maintains an "outperform" rating on the stock with a $92 price target.