math_of_money
Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Facebook Inc.
27-07-2018, 08:36 AM.
Post: #111
RE: Facebook Inc.
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.
Full-time Investor and Blogger at https://kelvestor.com/

Find Reply
27-07-2018, 09:19 AM.
Post: #112
RE: Facebook Inc.
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.
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger

Find Reply
04-08-2018, 12:12 PM. (This post was last modified: 04-08-2018, 12:13 PM by weijian.)
Post: #113
RE: Facebook Inc.
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/

Find Reply
06-08-2018, 01:44 PM.
Post: #114
RE: Facebook Inc.
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.
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger

Find Reply
09-08-2018, 12:02 PM.
Post: #115
RE: Facebook Inc.
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

Find Reply


Forum Jump:


Users browsing this thread: 1 Guest(s)
Valuebuddies.com | Return to Top | Lite (Archive) Mode | RSS Syndication | CONTACT US: nas......@valuebuddies.com | | Share Buy-Back | Disclosure of Interest