Invest in Facebook shares now and double your money in 1 to 2 yrs?

[davidst01]

I write to discuss Facebook shares on NASDAQ. It is my opinion that the shares will double in price in the next1 to 2 years. It is currently trading around $80 a share. At the moment many analysts in the States predict the share price in the short term to be around $105. Here are some comments from brokerage firms in New York:

-The key to the Facebook story continues to be its ability to succeed on the mobile platform, where significant ad dollar growth is likely to occur for multiple years.

-Facebook’s video consumption growth remains explosive as it evolves into a premier digital mobile video platform, reaching 4 billion video views/day in 1Q15 (75% on mobile) vs. 3 billion in 12/14 and 1 billion in 9/14.

-While clearly a more loved stock by global investors in 2015 vs. 2014, Facebook’s continued execution, early stage in monetization of time spent and leadership position in mobile shouldn’t be treated with complacency. Going forward, we look to (the second half of 2015) and 2016 as catalysts for product innovation and monetization as Facebook broadly deploys solutions in video, messaging, eCommerce and ad tech.”

-While there was not much quantitative detail in terms of 1Q15 results regarding video ads, we still think video ads and gradually higher ad load rates on the core Facebook news feed and overall Instagram ads with higher penetration with large brand advertisers will be key incremental revenue growth drivers this year and into 2016.”

-Facebook remains one of our Top Long Recommendations in the Large Cap Net sector. Facebooks’s Q1 P&L and Metrics results were intrinsically very strong. We see the company correctly ramping up investments – from a position of strength – in many promising, high-growth areas (e.g. video – now at 4 billion daily video views vs. 1 billion in Q3). And those high-growth areas represent four greenfield revenue opportunities (Instagram Monetization, Auto-Play Video Ads, FAN & WhatsApp) that can contribute well over $2 billion in incremental revenue in 2015.”

An analysis by Morgan Stanley recently suggests: ‘’FB is on a trajectory to surpass Google as the biggest winner of incremental ad dollars’’:

http://finance.yahoo.com/news/looks-facebook-could-soon-pass-171923895.html

Another thing to consider is that if FB is allowed to operate in China in the future I believe there will be a massive surge in the stock price. Its only a matter of time when this will happen.

Management in FB are evidently very strategic when it comes to increasing its MAU (monthly active users)….

http://www.zdnet.com/article/who-really-wins-from-facebooks-free-internet-plan-for-africa/#ftag=YHFb1d24ec

To sum up…. Here is a stock comparison between Google and FB:

http://www.nasdaq.com/symbol/goog/stock-comparison

Google is priced at $533 a share (this is after a stock split a few yrs ago). FB is currently priced around $80. Its anyone’s guess what the price of FB will be in 2 or even 5 years time. Investing on the stock market does have its risks. However, FB’s debt levels are extremely low and their revenues are exploding year by yr. Even if the market crashes, the company is financially strong and has in excess of 1 Billion MAU's (and growing everyday). They are also close to releasing their virtual reality software and they are about to roll out the search functions which could directly compete with Google. Read this article entitled

''Facebook’s New In-App Search Could Be a Google Nightmare'':

http://www.wired.com/2015/05/facebook-add-a-link-search/

Facebook has much more ad space on its social network – and higher engagement. Facebook is now the second largest online ad seller globally, trailing only search giant Google Inc. (GOOG).

Facebook’s revenues are growing swiftly as ad load rises and more advertisers ramp up their digital efforts to target the new age users. Analysts polled by Bloomberg expect the company’s annual revenues to rise to $29 billion by fiscal 2017, up from $12.4 billion in fiscal 2014.

[NeverSure]

Facebook's PE ratio is 78.24 and has been that high or higher for at least five years. LINK

It looks to me as if all of that potential growth is already speculated priced in.

I never try to predict the stock market but I'm not a buyer at that price. If I bought any it would be a small percentage of my portfolio.

[dotpoom]

Just seen it is in the No. 1 spot for returns.

[TheFishman1]

What dies this have to do with Thailand me think this will be closed soon

[1FinickyOne]

At any moment in time, the price of a stock is at "market value" - so, you might say an equal number of people want to sell as buy - an equal number of people agree with you that the future is bright and an equal number not...

That said, if the market gets hit and takes a big turn down, it is more than likely that FB will also go down in spite of the items you mentioned…

Keep in mind that you are playing against some pretty knowledgable people and computers too...

[bbabythai]

Facebook's PE ratio is 78.24 and has been that high or higher for at least five years. LINK

It looks to me as if all of that potential growth is already speculated priced in.

I never try to predict the stock market but I'm not a buyer at that price. If I bought any it would be a small percentage of my portfolio.

Everyone will have their own opinion on shares in the stock market. Perhaps 'neversure' fails to understand that tech companies traditionally have high PE ratios - as Google did. One of the reasons for FB's high PE ratio is that it has high expected future growth in earnings.

Most brokerage firms rate this stock as a 'BUY" at the moment. A very small percentage rate the stock as a hold. What does this tell you. Perhaps OP is correct

[stoli]

I personally want to get away from FB now that there are so many ads. I did not sign up for that. Magazines and newspapers went this route, 75% ads, and their business is in the toilet. FB can easily kill the golden egg.

[Shiver]

I've never owned any shares ever, but if I were thinking of doing that, then looking at returns (and for me, an eye on safety), I think given the state of the economy I'd have to look to 'unethical shares' (McDonalds, Lockheed, tobacco etc), as they seem to be resilient in market collapse scenarios.

For Facebook specifically, I think the Ad revenue approach will eventually fall off, as people start to look to paid for services to avoid adverts, get more bandwidth and tailored a-la-carte selections. Also there are alternatives to FB appearing that are cleaner and don't sell your behavioural data, wipe your links because 'they' deem it inappropriate and so on. On top of that there are distributed/decentralised ideas springing up like MAIDSAFE and KimDotCom type thinking that could in a number of years make FB look like the AOL/Compuserve model of social networks. This isn't going to happen this week, but a few years down the line then maybe. Just something to keep an eye out for if you choose to jump in.

One last thing: I've never seen an advert on Facebook ever. Perhaps that's because I use ad blocking plug-ins (not sure, and don't want to test it). That's an easy thing to do, and if it became popular could wipe out FB revenues in a heartbeat.

[recycler]

Facebook is growing in third world countries. In the west you see people increasingly turning away from it, certainly the younger people, that are the new spenders. In the west Facebook is populated by middle aged and older people that initially joined to keep in touch with the world of their children and grandchildren, but as these kids move elsewhere, their activity will go down too.

As it's becoming more and more clear and visible that Facebook and Google are following our every move and that is creeping up on people. Give it a few years and this awareness will also increase in developping countries.

Soon you will discover where the masses go, but my guess is that Facebook is not the long term hangout anymore.

[Suradit69]

I've traded FB for several years along with buying calls and selling covered calls, so that my per share basis is $43.81 ... getting close to a double already.

Right now there is a good chance that Zuckerberg will continue to ramp up capex, which will frighten away some investors. After the last earnings call, the stock fell back and appeared to have lost its momentum until the end of last week when it popped on news.

The general consensus (which doesn't necessarily make it right) is that you need to hold this for the long term. I've reduced my holdings of it because I think it'll be range bound in the $80's for awhile, but I wouldn't want to to be totally out of it.

It has a high PE, but it's 3 year average revenue and income growths are 50% and 43%.

I think some of the people commenting have a very limited understanding of what the company is getting into. The potential of things like Oculus and the recent collaboration with 9 publishers, among many other things, could be enormous.

Edited May 18, 2015 by Suradit69

[maidee]

what does facebook produce ????

AIR

you want to build casltes in the sky, than invest aLL your money

[recycler]

what does facebook produce ????

AIR

you want to build casltes in the sky, than invest aLL your money

There is a lot of money made in selling air, not just since the Internet, but long before that!

[ghworker2010]

I've traded FB for several years along with buying calls and selling covered calls, so that my per share basis is $43.81 ... getting close to a double already.

Right now there is a good chance that Zuckerberg will continue to ramp up capex, which will frighten away some investors. After the last earnings call, the stock fell back and appeared to have lost its momentum until the end of last week when it popped on news.

The general consensus (which doesn't necessarily make it right) is that you need to hold this for the long term. I've reduced my holdings of it because I think it'll be range bound in the $80's for awhile, but I wouldn't want to to be totally out of it.

It has a high PE, but it's 3 year average revenue and income growths are 50% and 43%.

I think some of the people commenting have a very limited understanding of what the company is getting into. The potential of things like Oculus and the recent collaboration with 9 publishers, among many other things, could be enormous.

This is obviously the most intelligent response thus far. Suradit69 last comment 'i think some of the people commenting have a very limited understanding...' is an understatement. just read 'maidee's comment above. ha ha

The realiity is that FB has strong financials and its an innovative and strategic company. Their n.o 1 target is to take on Google and they are doing this.

I also believe the stock price will increase substantially in the future especially if the virtual reality Oculus technology is a big hit.

[NeverSure]

what does facebook produce ????

AIR

you want to build casltes in the sky, than invest aLL your money

That's very valid. The tech boom is relatively new and so are these companies. They have already proven that they can knock off the existing competition, and all new competition needs is some 1's and 0's, a server and a better idea.

Does anyone else remember when Yahoo ruled the search engine wars and one had to subscribe to use it? Google took care of that. Yahoo led the online auction biz until ebay came along. Yahoo has reinvented itself but it will never take out ebay or google. Someone else might though with yet a better idea.

Sometimes we forget how fluid tech is. There are about 10,000 new English words and acronyms due to tech. I have an American dictionary of them which is five years old and obsolete. Whatever happened to America Online? Oh yeah, it's still there.

Here's how I've bought tech stocks and it's the same way I buy new retail store stocks. If I find myself hearing about it, trying and liking it and returning, I buy some stock. If a person would have done that just with Microsoft and Walmart and Amazon and Google and Facebook when he first heard about them and started using them, his troubles would be over. However I no longer own any of those stocks because I don't know where the peak is or was.

Cheers

[MauiSteveBKK]

I Will Stay With Apple (AAPL) Thank You!

They will soon be the first "Trillion Dollar Market Cap" Company.

I'm very happy.

[ghworker2010]

I Will Stay With Apple (AAPL) Thank You!

They will soon be the first "Trillion Dollar Market Cap" Company.

I'm very happy.

what price did you buy them at and how many?

[chilli42]

That is an investment strategy doomed to failure.

Better you build a portfolio of companies, set an achievable return on investment (something in the area of 10-15%) and hold it for long term. Gradually buy and build that portfolio over time. By all means include FB in that portfolio if you beleive it's performance will be what you say it is.

The approach you propose now is not called investing, it's called gambling. Sure, on occasion your number will come up. Most of the time it does not. At least consider what happens to your investment when we hit another economic downturn which we are overdue for.

[ghworker2010]

what does facebook produce ????

AIR

you want to build casltes in the sky, than invest aLL your money

That's very valid. The tech boom is relatively new and so are these companies. They have already proven that they can knock off the existing competition, and all new competition needs is some 1's and 0's, a server and a better idea.

Does anyone else remember when Yahoo ruled the search engine wars and one had to subscribe to use it? Google took care of that. Yahoo led the online auction biz until ebay came along. Yahoo has reinvented itself but it will never take out ebay or google. Someone else might though with yet a better idea.

Sometimes we forget how fluid tech is. There are about 10,000 new English words and acronyms due to tech. I have an American dictionary of them which is five years old and obsolete. Whatever happened to America Online? Oh yeah, it's still there.

Here's how I've bought tech stocks and it's the same way I buy new retail store stocks. If I find myself hearing about it, trying and liking it and returning, I buy some stock. If a person would have done that just with Microsoft and Walmart and Amazon and Google and Facebook when he first heard about them and started using them, his troubles would be over. However I no longer own any of those stocks because I don't know where the peak is or was.

Cheers

To suggest that maidee comment is valid is ridiculous. Its written from a bar stool in pats.

FB has over a BILLION monthly active users (MAU's). Did you read that. Yes I said over a billion registered users. These are MAU's that registered an account and use the service each day. This is what advertisers know and its why FB is gaining such a huge market share of mobile / video advertising. This MAU figure increases each month.

Another member above rates Apple and thats fair enough. Zuckerberg has a brilliant techie mind like steve jobs. Why not invest in FB whilst the share price is so cheap. I have...

[marioc]

Thai Visa Forum...... info about Thailand.....

"Invest in Facebook shares...."

????????????????????????????????????????????????

I just don't get the point.

[csabo]

AAPL has more than doubled in the same time frame and they have a product that you can touch. Personally I hate FB and all it stands for. When I see 6 people sitting in a restaurant together and all 6 are ignoring each other and scouring FB for the latest BS update from some friend of a friend they hardly know I think it is the end of a productive society. I don't invest in things I hate if at all possible. That being said, it's your money and your time.

[recycler]

what does facebook produce ????

AIR

you want to build casltes in the sky, than invest aLL your money

That's very valid. The tech boom is relatively new and so are these companies. They have already proven that they can knock off the existing competition, and all new competition needs is some 1's and 0's, a server and a better idea.

Does anyone else remember when Yahoo ruled the search engine wars and one had to subscribe to use it? Google took care of that. Yahoo led the online auction biz until ebay came along. Yahoo has reinvented itself but it will never take out ebay or google. Someone else might though with yet a better idea.

Sometimes we forget how fluid tech is. There are about 10,000 new English words and acronyms due to tech. I have an American dictionary of them which is five years old and obsolete. Whatever happened to America Online? Oh yeah, it's still there.

Here's how I've bought tech stocks and it's the same way I buy new retail store stocks. If I find myself hearing about it, trying and liking it and returning, I buy some stock. If a person would have done that just with Microsoft and Walmart and Amazon and Google and Facebook when he first heard about them and started using them, his troubles would be over. However I no longer own any of those stocks because I don't know where the peak is or was.

Cheers

To suggest that maidee comment is valid is ridiculous. Its written from a bar stool in pats.

FB has over a BILLION monthly active users (MAU's). Did you read that. Yes I said over a billion registered users. These are MAU's that registered an account and use the service each day. This is what advertisers know and its why FB is gaining such a huge market share of mobile / video advertising. This MAU figure increases each month.

Another member above rates Apple and thats fair enough. Zuckerberg has a brilliant techie mind like steve jobs. Why not invest in FB whilst the share price is so cheap. I have...

You describe exactly what caused the Dot-Com collapse in 2000. Back them internet compenies where taken over or went public based on registered users. Most of these companies have no role in the value chain anymore. Just looking at number of users, accounts, etc. is dangerous, what is and will be the position of Facebook in the value chain, how much can they make now and in the future, who can push them out of the way or eat away their position?

In 2000 I was right in the middle of this being a rep in the team at the incumbent telco in the Netherlands that took care of the internet providers. At that time World Online (WOL) went public at a price per share based on their number of subscribers. That price was so high that in the next 10 years every subscriber had to purchase the value of a Volkswagon Golf and WOL had to make 10% out of that. Being completely informed about the cost structure and business model of WOL some of my colleagues bought shares in the so called "friends and family program", some of them got in real trouble even at discounted rates. The IPO was a complete disaster and one of the events that led to the Dot-Com Crisis! And by now what is the role in the value chain of internet providers?

[Misty]

I remember when the dot com bubble was near to bursting, some of us were hauling out old copies of Burton Malkiel's classic "A Random Walk Down Wall Street" to review his chapters on market booms and busts, especially the 'tronic boom of the 60s.

For a walk down memory lane I googled Tronic boom and found this old Forbes article. An oldie but goodie circa 1999:

Forbes Jan 1999: Bubbles: From "tronics" to "dot com" . http://www.forbes.com/1999/01/14/mu3.html

To be continued.....

Edited May 18, 2015 by Misty

[Robert24]

I wouldn't buy FB stocks but then again I'm not a tech stock expert. Personally I find it difficult to predict in the tech world as to who is the future leader. And big very successful companies disappear quickly and others come up. Not long ago Yahoo, Nokia, Motorola were big successful companies and now it seems Apple, Samsung, Xiaomi, Amazon, Alibaba are the successful ones. Who is successful in the future - I don't know. Product innovation is key to be successful here and to me it looks like Google is certainly far superior to FB in terms of new product innovation. Which new product did FB bring to the market? How does their new product pipeline look like? To me it looks as there isn't as much as there is with Google. But just a personal view, again I'm not a tech company expert.

But if you buy a solid, traditional pharmaceutical company with a good product pipeline, a traditional beverage company with strong market share etc you may do far better in the long run than betting on a tech company that not be around anymore in 5-10 years time.

[Asiantravel]

what does facebook produce ????

AIR

you want to build casltes in the sky, than invest aLL your money

That's very valid. The tech boom is relatively new and so are these companies. They have already proven that they can knock off the existing competition, and all new competition needs is some 1's and 0's, a server and a better idea.

Does anyone else remember when Yahoo ruled the search engine wars and one had to subscribe to use it? Google took care of that. Yahoo led the online auction biz until ebay came along. Yahoo has reinvented itself but it will never take out ebay or google. Someone else might though with yet a better idea.

Sometimes we forget how fluid tech is. There are about 10,000 new English words and acronyms due to tech. I have an American dictionary of them which is five years old and obsolete. Whatever happened to America Online? Oh yeah, it's still there.

Here's how I've bought tech stocks and it's the same way I buy new retail store stocks. If I find myself hearing about it, trying and liking it and returning, I buy some stock. If a person would have done that just with Microsoft and Walmart and Amazon and Google and Facebook when he first heard about them and started using them, his troubles would be over. However I no longer own any of those stocks because I don't know where the peak is or was.

Cheers

To suggest that maidee comment is valid is ridiculous. Its written from a bar stool in pats.

FB has over a BILLION monthly active users (MAU's). Did you read that. Yes I said over a billion registered users. These are MAU's that registered an account and use the service each day. This is what advertisers know and its why FB is gaining such a huge market share of mobile / video advertising. This MAU figure increases each month.

Another member above rates Apple and thats fair enough. Zuckerberg has a brilliant techie mind like steve jobs. Why not invest in FB whilst the share price is so cheap. I have...

http://thenextweb.com/facebook/2014/02/03/facebook-estimates-5-5-11-2-accounts-fake/

[NeverSure]

I remember when the dot com bubble was near to bursting, some of us were hauling out old copies of Burton Malkiel's classic "A Random Walk Down Wall Street" to review his chapters on market booms and busts, especially the 'tronic boom of the 60s.

For a walk down memory lane I googled Tronic boom and found this old Forbes article. An oldie but goodie circa 1999:

Forbes Jan 1999: Bubbles: From "tronics" to "dot com" . http://www.forbes.com/1999/01/14/mu3.html

To be continued.....

From your link, and good post BTW.

“What held the Nifty Fifty up? The same thing that held up tulip-bulb prices in long-ago Holland–popular delusions and the madness of crowds. The delusion was that these companies were so good that it didn't matter what you paid for them; their inexorable growth would bail you out.”

Welcome to the new tulip bulb.

Edited May 18, 2015 by NeverSure

[hhgz]

If you sit around and wait, caugth in an analysis paralysis, it won't matter. Perhaps you don't remember when Facebook went public @ $20/share, and the price immediately dropped. "Oh, boo hoo", investors ranted, "we were cheated, and we're filing lawsuits." Shortly thereafter, the price recovered, and you know the current stock price.

[WorkingTourist]

[…] big very successful companies disappear quickly and others come up […] now it seems Apple, Samsung, […]

As for Samsung (Q1 2015):

The South Korean company reported net profit of 4.63 trillion won (about $4.35 billion), a 39 percent drop from the 7.49 trillion won it reported a year ago. This fell below analysts’ expectations, as well as Samsung’s own forecast for operating profit of 5.9 trillion won. Revenue slipped 12 percent year-over-year to 47 trillion won.

So things do indeed move fast. As for this statement in the OP: “Facebook’s video consumption growth remains explosive”, it’s worth mentioning that YouTube is still not a profitable business for Google.

As for number of users, these users are not contributing to significant profit, and we have seen other services appear after FB that has

achieved large MAU in rather short time (Instagram is at 300m), which is probably why FB are buying up some of them, as these could become a threat to FB.

As for your comparison with Google, Google has a better earnings per share with a lower P/E, so I’m not sure how this comparison should make FB look attractive.

Finally remember that what everybody knows is already in the price, so all the positive things you mention about FB, that is what they have to deliver on to keep their current valuation.

[gk10002000]

Speculating purely on growth is not the best investment plan. One should have some interest and dividend paying things in their portfolios. Bonds, bond funds or ETFs, some dividend paying stocks, etc. Facebook doesn't pay anything out. The social media thing is overplayed in my opinion. FB makes its money by advertising, forcing people to sign up on FB just to view some event information that some other agency posts. I personally hate the whole idea of the thing. It manipulates or forces people to give out lots of personal information. People will grow tired of it

[Lukecan]

Theres a decent chance of it halving as well

[bbabythai]

Speculating purely on growth is not the best investment plan. One should have some interest and dividend paying things in their portfolios. Bonds, bond funds or ETFs, some dividend paying stocks, etc. Facebook doesn't pay anything out. The social media thing is overplayed in my opinion. FB makes its money by advertising, forcing people to sign up on FB just to view some event information that some other agency posts. I personally hate the whole idea of the thing. It manipulates or forces people to give out lots of personal information. People will grow tired of it

You are old school. Let me guess, your aged in your 60's or 70's....