“From June 1, 2012 to December 19, 2019 Facebook stock returned roughly 596% versus the S&P 500 return of 144%. That’s 4 timer the return of the market. Connecting people all over the world seems to be a profitable business.”
COMPANY PROFILE
Founded in 2004, Facebook's mission is to give people the power to build community and bring the world closer together. People use Facebook to stay connected with friends and family, to discover what's going on in the world, and to share and express what matters to them.
Recent Earnings
Courtesy of @saxena_puru
Revenue +25%YOY
Costs/expenses +34%YOY
Diluted EPS +8%YOY
FCF = $4.84b
FB DAUs = 1.66b (+9%YOY)
FB MAUs = 2.5b (+8%YOY)
Family DAP = 2.26b (+11%YOY)
Family MAP = 2.89b (+9%YOY)
Cash/equivalent = $54.86b
Opinion
From a factor scoring perspective versus the other 199 brands in the brands index, here’s where Facebook scores well as of 12/18/19:
96% high 3YR sales growth
93% Low debt to EV
90% high 1 YR sales growth
89% high operating margins
83% high R&D + SGA over vs net sales = innovator metrics
95% high free cash flow
81% high total sales
82% high ROIC
I’ve had to learn to separate Facebook the business and operating metrics and Facebook the firm Mark Zuckerberg and Sheryl Sandberg run. The management team makes me feel like I need a shower, they are not trust worthy human beings but they do run a business that dominates global advertising and social connections via FB and Instagram and WhatsApp. To me legacy Facebook is a nothing burger but Instagram is an enormous property with enormous long term potential in the e-commerce sector. Scrolling through images from the brands you love most and being able to click and order those items you love is a wonderful revenue opportunity. With 500m daily users, that’s a lot of opportunity for e-commerce and ad revenue. Oculus VR is inning #1 but I have no doubt some kind of virtual reality will eventually be a very important business line. Governments here and around the world are using them as the punching bag but the stock hasn’t cared and they generate soo much free cash they can pay to play for a very long time. There’s always a possibility the government tries to separate Instagram from Facebook but that’s not something to worry about now and frankly, perhaps at a $100B valuation estimate, it wouldn’t be a bad time for FB to monetize Instagram’s initial $1B purchase and spin part or all of the company out. The stock looks like a money maker so I own it, I’m not a Facebook fan but I enjoy Instagram and I like stocks that look like they can make clients money so for now, it’s a hold and buy on dips.