Facebook Inc.

[kelvesy]

They could just let the platform continue to grow but they chose to take a step back to focus lesser on growth and regulate themselves better. The dominance of FB is unmatched (for now....) FB is very targeted and gave small advertisers chance to compete as well.... for Google, it drives away small advertisers that do not have huge bidding power.

Instagram and Messenger has spaces to grow further... google ads are usually served towards people who already know what they want. FB serves ads according to likely interests and FB is able to create even different sets of customised users for advertisers to target.

[Wildreamz]

I think the rate of growth deceleration really came as a surprise (42% this quarter; ~35% in Q3; ~28-26% in Q4) to investors (including me). Operating margins also will be contracting more than expected from ~50% this quarter to ~35% long term. Which I think is less of a concern as it is better for them to invest their cash to develop better products and new markets etc.

The question now for Facebook is, at what level revenue growth will stabilize at, (will it stabilize at ~20+% like Google? or continue to decelerate to the mid teens by FY 2019?). 

The drop in stock price I believe is warranted (after all, there was a huge run up before earnings), until there is more clarity for the long term future of the company.

That said, personally I think the valuation is not demanding, it's similar to Google's, and Facebook still have better growth, outlook, and operating matrices than Google; even though both company has similar valuation multiples. Granted, Google's valuation is supported by healthy, stable growth in their advertising business (including Youtube), as well as the inroads they are making in the enterprise, cloud computing, machine learning, autonomous driving, and other initiatives.

Facebook C-suite has shown that they have the vision and execution chops. They had the foresight to spot the growth in chatting apps (Whatsapp), and Instagram (including short form video like Stories), and got there before anyone else. At times, they have shown to be somewhat sloppy with handling of data, and slow to respond to abuses of their platform.

All things considered, Facebook (and their family of apps) have became an essential tool for marketers and small businesses today. As well as a way for people to maintain an online identity (for other people to reach out to). I don't think they are going anywhere for now. And I will stay vested with them until the fundamental investment thesis changes.

[weijian]

Spending more money, reducing margins and deepening its moat?

Facebook Lenses

That seems unlikely: for all of the company’s travails and controversies over the past few years, its moats are deeper than ever, its money-making potential not only huge but growing both internally and secularly; to that end, what is perhaps most distressing of all to would-be competitors is in fact this quarter’s results: at the end of the day Facebook took a massive hit by choice; the company is not maximizing the short-term, it is spending the money and suppressing its revenue potential in favor of becoming more impenetrable than ever.

https://stratechery.com/2018/facebook-lenses/

[Wildreamz]

Sustainable, profitable growth at Facebook's size at 40+% seems unlikely, without chancing upon a huge emerging opportunity (like AWS) or overreaching (say overload the platform with ads). The negative impact on share price would be even greater when growth inevitably slows down.

Hitting the brakes now and strengthening business fundamentals, is definitely the right way to go.

[weijian]

hi Sumeria,
Would be appreciated if you can include some description etc, rather than posting single links without context. It would facilitate discussions greatly.

Moderator

[cyclone]

Facebook exodus: Nearly half of young users have deleted the app from their phone in the last year, says study

Matt Rosoff
September 6, 2018

Facebook's year of scandals is driving young users away from the platform, according to a Pew survey.

Pew surveyed more than 3,400 U.S. Facebook users in May and June, and found that a whopping 44 percent of those ages 18 to 29 say they've deleted the app from their phone in the last year. Some of them may have reinstalled it later.

Overall, 26 percent of survey respondents say they deleted the app, while 42 percent have "taken a break" for several weeks or more, and 54 percent have adjusted their privacy settings.

The results don't necessarily spell dire news for the company as a whole. The survey measures only the core Facebook app, not Facebook-owned Instagram, WhatsApp and Messenger, all of which remain popular and offer a lot of room for revenue growth. In addition, it does not measure Facebook users outside the U.S., where growth has continued as North American usage has stalled.

More details in https://www.cnbc.com/2018/09/05/facebook...d-app.html

[Wildreamz]

https://www.todayonline.com/singapore/co...ffee-shops
Costa Coffee exits S’pore, as tide turns in favour of indie coffee shops  
05 SEPTEMBER, 2018

The falling fortunes of major cafe chains — hit by hefty rents and soaring costs — come as independently run cafes become more popular.

These "indie" cafes, which serve up java that is roasted in-house or sourced from roasters around the world, are part of the so-called "third wave of coffee" movement. It emphasises, among other things, an appreciation of high-quality coffee as a craft beverage, with a similarly artisanal production process and alternative preparation methods.

..

These customers seek the "experiential factor", Mr Grover pointed out. "People want to advertise their lifestyle on their social media feeds. This is good for us — but it also keeps us honest and we have to really deliver."

---

This past few years I came to appreciate the power of social media more and more. To me it is no longer just a hyped up investment fad (everyone heard of them, use them on their phone, therefore investors are enamored by them and assign them a very high multiple). I have came to see social media as a democratizing force, one that empowers individuals and small brands to reach out to consumers and establish their presence at a lower cost then ever before; which allows them to compete against the big boys on a level playing field. 

They are also actively shaping cultures, tastes and trends. Consumers reach out and recommend products and services to one another more effectively on social media. As social media becomes more omnipresent, this is a new era of social discovery (online reviews, friend recommendations, influencer endorsement) driven commerce.

This "3rd wave of Coffee" is just part of a greater shift in consumer spending habits. From commercialized, efficient, top-down franchise business models (Toys"r"us, Macdonalds, Starbucks, Costa Coffee etc.); successful businesses are increasingly bottom-up, small businesses that provide more variety, more personal, and more experiential consumer experience.

Facebook remains the only social media company of note outside of China. As long as their dominance in social media remains intact. It remains an attractive investment to me.

(vested; ymmv)

[thor666]

https://www.todayonline.com/singapore/co...ffee-shops
Costa Coffee exits S’pore, as tide turns in favour of indie coffee shops  
05 SEPTEMBER, 2018

The falling fortunes of major cafe chains — hit by hefty rents and soaring costs — come as independently run cafes become more popular.

These "indie" cafes, which serve up java that is roasted in-house or sourced from roasters around the world, are part of the so-called "third wave of coffee" movement. It emphasises, among other things, an appreciation of high-quality coffee as a craft beverage, with a similarly artisanal production process and alternative preparation methods.

..

These customers seek the "experiential factor", Mr Grover pointed out. "People want to advertise their lifestyle on their social media feeds. This is good for us — but it also keeps us honest and we have to really deliver."

---

This past few years I came to appreciate the power of social media more and more. To me it is no longer just a hyped up investment fad (everyone heard of them, use them on their phone, therefore investors are enamored by them and assign them a very high multiple). I have came to see social media as a democratizing force, one that empowers individuals and small brands to reach out to consumers and establish their presence at a lower cost then ever before; which allows them to compete against the big boys on a level playing field. 

They are also actively shaping cultures, tastes and trends. Consumers reach out and recommend products and services to one another more effectively on social media. As social media becomes more omnipresent, this is a new era of social discovery (online reviews, friend recommendations, influencer endorsement) driven commerce.

This "3rd wave of Coffee" is just part of a greater shift in consumer spending habits. From commercialized, efficient, top-down franchise business models (Toys"r"us, Macdonalds, Starbucks, Costa Coffee etc.); successful businesses are increasingly bottom-up, small businesses that provide more variety, more personal, and more experiential consumer experience.

Facebook remains the only social media company of note outside of China. As long as their dominance in social media remains intact. It remains an attractive investment to me.

(vested; ymmv)

As a side note, the today article might not have been too detailed. As Costa coffee probably exited also in tune to Coca Cola takeover.

https://www.beveragedaily.com/Article/20...cquisition

Sent from my ONEPLUS A5000 using Tapatalk

[Sumeria]

On Thursday, the Department of Justice (DOJ) announced that nearly half of the state attorneys general would be invited to a September 25 meeting with U.S. Attorney General Jeff Sessions to discuss whether social media companies are violating anti-trust laws. The DOJ announced the meeting last week, following the congressional testimony of Facebook COO Sheryl Sandberg and Twitter CEO Jack Dorsey.

"Following last week’s statement, the Justice Department received an increased level of interest from state attorneys general in attending the September 25 meeting on tech companies, competition, and free exchange of ideas," a DOJ spokesman told PJ Media on Thursday afternoon. Due to this increased interest, Sessions has invited more attorneys general.

"Today, the Justice Department formally sent invitations to a bipartisan group of twenty-four state attorneys general that expressed an interest in attending the meeting hosted by Attorney General Jeff Sessions," the spokesman added. "The meeting will take place here at the Department of Justice, and we look forward to having a robust dialogue with all attendees on the topic of social media platforms."

Conservatives have long expressed suspicion that Google, Facebook, and Twitter have been censoring their content. Recent events have only underscored those questions, especially since Tucker Carlson reported on a letter in which a Google executive bragged about increasing Latino voter turnout in the 2016 election, thinking it would help Hillary Clinton.

https://pjmedia.com/trending/doj-invites...-facebook/

[Sumeria]

Break Up Google & Facebook?

Conservative voices taking steps to look harder at Big Tech anti-trust issues.

https://www.youtube.com/watch?v=wy3yXErsgss