FACEBROKE

[chiefsuave]

What is everyone take on the Facebook(176.26) Is it going to bounce back? Should we be BTFD? Is it done? For those of you not tracking; Facebook stock dropped nearly 20% lost $120B in value after warning that revenue growth will take a hit. It was not pretty. Just curious to what you guys are thinking?

-Suave

[sokoloff]

I bought a good sized position after hours in the low 170s.

I don’t think FB is “done” here. They may not dominate 24 years from now, but they will still be dominant 24 months from now, IMO.

[marty998]

It rose to unrealistically high valuations and sensible heads are starting to think about how it should be actually priced.

At some point you have to live up to your own hype (refer tulips, dot.com etc).

Facebook's earnings are $1.74(?) per quarter. Is it realistic to pay $200 for $7 of earnings when you can't get any more "customer" growth because you are running out of people on the planet to sell to?

No it's not. Ergo the share price falls.

There will soon come a point where Instagram overtakes the main Facebook product in terms of popularity and profitability. If Facebook didn't acquire that, the share price would be quite a bit lower than it is today.

The question is, when parents and grandparents follow their kids to Instagram, where will the kids go next to escape? What is the next driver of growth for them, that will actually turn a profit commensurate with the lofty valuations?

The regulatory risk won't go away either. And that will further cut the valuations in future too.

[chiefsuave]

The question is, when parents and grandparents follow their kids to Instagram, where will the kids go next to escape? What is the next driver of growth for them, that will actually turn a profit commensurate with the lofty valuations?

I just talked to a coworker about this. Social media migration is a real thing. I've lived through Myspace/Twitter/Tumblr/Facebook/Snapchat/Instagram/LinkedIn; One thing is common the younger crowd loves being network rebellious.

[katsiki]

I just saw a recent poll about teens and social media.  Most popular in order are: youtube, instagram, snapchat, FB, twitter.  Interesting stuff.

Found the link....

http://www.pewinternet.org/2018/05/31/teens-social-media-technology-2018/

[mathlete]

The question is, when parents and grandparents follow their kids to Instagram, where will the kids go next to escape? What is the next driver of growth for them, that will actually turn a profit commensurate with the lofty valuations?

I just talked to a coworker about this. Social media migration is a real thing. I've lived through Myspace/Twitter/Tumblr/Facebook/Snapchat/Instagram/LinkedIn; One thing is common the younger crowd loves being network rebellious.

Facebook is the only one out of those listed to post billion dollar earnings though. Nearly $16b in their last FY. I believe they deserve some separation from the rest for that reason.

If it's true that kids fled Facebook to go to Snapchat and Twitter, then it evidently hasn't impacted the bottom line. Facebook has grown earnings every year since 2014 while SNAP and TWTR have yet to post positive earnings.

People have been nay saying Facebook since its IPO six years ago. Since then, the stock has 5x'd and has the earnings to support that valuation.

That said, I'm not dumping everything into FB or anything, but yeah, I put a little bit in this morning.

[chiefsuave]

People have been nay saying Facebook since its IPO six years ago. Since then, the stock has 5x'd and has the earnings to support that valuation.

That said, I'm not dumping everything into FB or anything, but yeah, I put a little bit in this morning.

I agree! Straight facts. Facebook has also been buying out really good companies and expanding into different well diversified groups. I think we all expected Facebook to eventually run out of people. I wonder what their next move for revenue will be. Advertising/Data is huge but there is always a limit.

[aspiringnomad]

I've got complicated feelings about this. I own some FB stock and have for a while, so have done well with it. At the same time, I hate Facebook the product, think it's largely responsible for disseminating much of the misinformation that has led us to where we are today, and see that its userbase gets older and older as younger people turn away from it. Having said that, I think Instagram is going to take over FB as the dominant social media platform (I realize it has been trending this way for a while) and FB owns Instagram. If it didn't own Instagram, I would have sold all my FB stock a long time ago.

[Heckler]

VTI down 0.x % yesterday.  Meh. 

I dont have a facebook account, nor will I ever own stock directly.

[inline five]

Facebook is up 15% since it's low back in March. What is compelling about it now that wasn't back then when you didn't buy?

[inline five]

It rose to unrealistically high valuations and sensible heads are starting to think about how it should be actually priced.

At some point you have to live up to your own hype (refer tulips, dot.com etc).

Facebook's earnings are $1.74(?) per quarter. Is it realistic to pay $200 for $7 of earnings when you can't get any more "customer" growth because you are running out of people on the planet to sell to?

No it's not. Ergo the share price falls.

There will soon come a point where Instagram overtakes the main Facebook product in terms of popularity and profitability. If Facebook didn't acquire that, the share price would be quite a bit lower than it is today.

The question is, when parents and grandparents follow their kids to Instagram, where will the kids go next to escape? What is the next driver of growth for them, that will actually turn a profit commensurate with the lofty valuations?

The regulatory risk won't go away either. And that will further cut the valuations in future too.

Pulling the numbers from Yahoo shows a PE of 28. Not really that far above the rest of the market when you factor in their growth.

I'm not arguing for buying it, but paying a multiple of 28 for a high growth stock doesn't seem crazy when the entire market is selling for about 20.

[Laserjet3051]

Facebook is up 15% since it's low back in March. What is compelling about it now that wasn't back then when you didn't buy?

Great point.

[LiveLean]

I refuse to invest in evil companies. I've never owned Disney for this reason.

[HBFIRE]

I refuse to invest in evil companies. I've never owned Disney for this reason.

So you don't buy index funds?

[FIRE@50]

I refuse to invest in evil companies. I've never owned Disney for this reason.

What metric do you use to determine which companies are evil?

[Heckler]

What metric do you use to determine which companies are evil?

any company that makes you sit in a cubical all day.  ;)

[HBFIRE]

I refuse to invest in evil companies. I've never owned Disney for this reason.

What metric do you use to determine which companies are evil?

Evil capitalistic ones!

[gerardc]

Twitter took a deep plunge today too, and Intel somewhat.

In the end I'd say Facebook and Twitter are a little overvalued, because they could be dead very quickly if the trendy youth decides it's not cool anymore.

In contrast to Google and Amazon whose position in the market isn't just based on popularity but is also technical in nature.

[gerardc]

Facebook's earnings are $1.74(?) per quarter. Is it realistic to pay $200 for $7 of earnings when you can't get any more "customer" growth because you are running out of people on the planet to sell to?

Interesting, but seems like something investors could have predicted. Usually you can assume YOY growth stays the same, and this inflates the stock price even with lowish earnings, but the model could be adjusted to account for market saturation...

[Brother Esau]

FB top is in

[YoungStache]

What is everyone take on the Facebook(176.26) Is it going to bounce back? Should we be BTFD? Is it done? For those of you not tracking; Facebook stock dropped nearly 20% lost $120B in value after warning that revenue growth will take a hit. It was not pretty. Just curious to what you guys are thinking?

-Suave

https://www.bloomberg.com/news/articles/2018-07-26/facebook-insiders-have-sold-4-billion-of-shares-since-scandal

^ insider selling

[boarder42]

I'm thinking you need to stop trying to time the market much less an individual stock. It's a waste of time. Facebook wouldn't be Facebook if my parents were on it when it started when I was in college. If I were a kid I'd be as far away from Facebook as possible. Old people are on it now.

[marty998]

Pulling the numbers from Yahoo shows a PE of 28. Not really that far above the rest of the market when you factor in their growth.

I'm not arguing for buying it, but paying a multiple of 28 for a high growth stock doesn't seem crazy when the entire market is selling for about 20.

Facebook's earnings are $1.74(?) per quarter. Is it realistic to pay $200 for $7 of earnings when you can't get any more "customer" growth because you are running out of people on the planet to sell to?

Interesting, but seems like something investors could have predicted. Usually you can assume YOY growth stays the same, and this inflates the stock price even with lowish earnings, but the model could be adjusted to account for market saturation...

Question is whether the market sees it as a high growth stock anymore. I don't think it does.

It's not to say it won't continue to generate massive profits, but the P/E multiple might come down a few notches.

[AccidentalMiser]

I bought a small position in FB yesterday.  I don't think FB is over by a long way.  I don't have a FB account but they have made me some money over the years.

That said, if it breaks down significantly from here, I'll cash it in. 

[MaaS]

What is everyone take on the Facebook(176.26) Is it going to bounce back? Should we be BTFD? Is it done? For those of you not tracking; Facebook stock dropped nearly 20% lost $120B in value after warning that revenue growth will take a hit. It was not pretty. Just curious to what you guys are thinking?

-Suave

I think some of Facebook's best days are ahead of it. Specifically:

• Messenger and Whatsapp are barely monetized. The potential here is much, much greater than the general public (and yes, analysts) believe. One example of many: Messenger is quickly becoming what the RSS feed was in the past. A true content/subscription delivery system.
• Instagram is just getting started. IGTV is going to be HUGE and will take a massive bite out of YouTube's business. Content creators can simply post on both platforms. IG has a network effect. YT does not.
• They're in the midst of a fundamental platform shift to video on FB.  In the short term, this reduces ad capacity as they ease users into their monetization flow. Also, advertisers have yet to catch up as they don't have the correct creative yet. Eventually, the capacity problem subsides and the average cost per ad is significantly higher.
• GDPR is a good thing for Facebook.  It's greatly reduced the ability for startups to compete.
• The revenue potential from VR on their platform makes today's profits look trivial. There's a very real chance that we're buying "tickets" to pro sporting events and touring homes on one of their platforms in the future.

Also, it works. Source: I own a marketing agency and see the ROI data daily. Facebook is simply the best ROI out there for many.

This is one of the cheapest stocks in the SP500. While I'm almost entirely an index guy, I do own some FB and have no plans to sell.

[chiefsuave]

I think some of Facebook's best days are ahead of it. Specifically:

• Messenger and Whatsapp are barely monetized. The potential here is much, much greater than the general public (and yes, analysts) believe. One example of many: Messenger is quickly becoming what the RSS feed was in the past. A true content/subscription delivery system.
• Instagram is just getting started. IGTV is going to be HUGE and will take a massive bite out of YouTube's business. Content creators can simply post on both platforms. IG has a network effect. YT does not.
• They're in the midst of a fundamental platform shift to video on FB.  In the short term, this reduces ad capacity as they ease users into their monetization flow. Also, advertisers have yet to catch up as they don't have the correct creative yet. Eventually, the capacity problem subsides and the average cost per ad is significantly higher.
• GDPR is a good thing for Facebook.  It's greatly reduced the ability for startups to compete.
• The revenue potential from VR on their platform makes today's profits look trivial. There's a very real chance that we're buying "tickets" to pro sporting events and touring homes on one of their platforms in the future.

Also, it works. Source: I own a marketing agency and see the ROI data daily. Facebook is simply the best ROI out there for many.

This is one of the cheapest stocks in the SP500. While I'm almost entirely an index guy, I do own some FB and have no plans to sell.

This is an awesome outlook on FB potential for the future. DISCLAIMER I'm not trying to time the market. I'm genuinely curious to its ability to expand/stay relevant.

I can only imagine now "attending" an open house via VR or watching the (insert team) win a championship. Extremely interesting stuff.

Thanks!

[effigy98]

What metric do you use to determine which companies are evil?

any company that makes you sit in a cubical all day.  ;)

or even worse, an open space