Why Facebook's Expenditure Is A Cause Of Concern For Its Investors

Facebook Inc FB reported its fourth-quarter results Wednesday afternoon. Although the company managed to beat analysts’ expectations with a surge in earnings, its expenditures that rose by 87 percent raised eyebrows.

Brad Gastwirth, CEO of ABR Investment Strategy, was on CNBC to discuss why Facebook’s spending is cause of concern for its investors.

"It’s not valuation, that's really not the concern," Gastwirth said. "It's really spending, they spent a lot, it was an increase around 87 percent year-over-year and that scares people. Now you are growing revenue just under 50 percent a year, so your spending is outpacing revenue growth and that's what certainly put little bit of a yellow flag for some, but Zuckerberg made it very clear last quarter that they are going to increase spending."

He continued, "They had a very big increase for the year target on spends and they narrowed it down a little bit on today’s call and the biggest thing here is they need to make sure that they can monetize on the investments and get a good return on investments."

It's going to take several years for them to really make good on of the likes of an Oculus, where they spent a lot of money on where it's really few years away from really becoming profitable for them."

Gastwirth feels that, "as long as they [Facebook] can grow the top-line and if they continue to grow it in the 40 to 50 percent per year, the stock is going to go much higher in the next 12 to 24 months."