Facebook Inc (NASDAQ:FB), the world’s largest social media site, has launched a number of initiatives to generate revenue. The company now has over 1 billion active users, but the company hasn’t been able to monetize on them. The company has unveiled projects like targeted ads, promoted posts, sponsored stories, search engine plans, etc. They all revolve around just one word – Advertising! Despite all the attempts, the company still generates just a few pennies per user, per month.

Facebook Shares

How about Facebook generating a few dollars per user every month, instead of a few cents? Yes, that’s possible. And it has the power of a magnet to pull investors. Facebook Gifts, a new program that expands Facebook Inc (NASDAQ:FB)’s business into commerce, could make it happen. Even if the third quarter results (to be announced tomorrow) are less than stellar, Facebook Gifts is a good enough reason to buy FB shares.

Analysts expect Facebook Inc (NASDAQ:FB) to bring in just 40 cents per user per month in 2012 through advertising. It becomes more disappointing as more users have started accessing the site via mobile, where Facebook can’t display lots of ads on a small screen.

Facebook Gifts will allow users to send “gifts” to their loved ones using a Gift button. Facebook Inc (NASDAQ:FB) already has postings for wedding announcements, birthdays, and baby arrivals, so “gifts” looks like a natural extension. When you click on the “gifts” button, a new menu of gifts will pop up, such as flowers, chocolates, teddy bears, Starbucks gift cards, and other offerings. With over 1 billion potential buyers, merchants are likely to do anything to get their products featured prominently on Facebook Gifts.

You won’t have to enter the address of the recipient. The recipients will fill out their addresses. And, in the process, Facebook will gain new user info – their credit card data. Using this information, Facebook will be able to place more specific ads based on the kind of products people buy, instead of just what they “Like.”

Another advertising method that seems to be working for Facebook is allowing advertisers to buy space in the user’s news feeds. Users are always focused on the news feeds, whether on mobile or desktop.

Yes, Facebook Inc (NASDAQ:FB) has the potential to make money, but the biggest question is: How much to pay for this potential? Currently, Facebook Inc (NASDAQ:FB) shares are trading at $19, just half of their IPO price. That looks like a bargain. Sure, Tuesday’s Q3 results could disappoint investors if the shift to mobile is still in the process. But the promising initiatives would make Facebook a money spinner in the long run.

The stocks are currently priced far too cheaply. So, go ahead, there won’t come a better time. And that’s why Goldman Sachs has increased its price target to $37 right before the third quarter earnings.