Facebook Flap Overblown -- Massive Growth Lies Ahead

Developers should be able to generate value from Facebook's global reach, as Zynga(ZNGA) has, through so-called revenue credits. Martin even says PayPal, owned by eBay(EBAY) , and credit card companies could lose revenue to Facebook credits over time.

Martin also notes that Facebook's margins are likely to grow exceptionally fast, as it is a fixed-cost business. This will allow earnings to rise faster than revenue, which may lead to upside in the stock price. As advertisers continue to move advertising online and the company's e-commerce initiatives take off, this is likely to improve Facebook's revenue over time.

There are several caveats to investing in Facebook, Martin says. The major risks to her price target include fatigue, privacy concerns, advertising seasonality, mobile, and its relationship with Zynga and others that may impede Facebook's meteoric rise.

Zynga is one of the largest risks to Facebook, accounting for 12% of revenue. If the relationship were to deteriorate, that is a significant portion of revenue Facebook would have to make up elsewhere, or risk seeing revenue growth slow, or even contract. Zynga's relationship expires with Facebook in May 2015.

Facebook has mentioned mobile as an impediment to growth, having listed it twice in the risk section of its S-1 regulatory document. Despite that, the mobile advertising market is expected to reach $2.9 billion by 2014, up from $1.6 billion in 2012, according to BIA/Kelsey. Facebook has addressed this issue, most notably buying Instagram for $1 billion.

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--Written by Chris Ciaccia in New York

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