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

[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

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

Bad guess. Not even close. If you are young then you don't seem to have learned patience yet. A mixed and varied portfolio does work and will continue to work. Always speculating much more often than not ends up with little. Some patience and some time can make anybody a millionaire in 20 years. And if you start at 25 that means at 45 you can punch out. And that is a simple conservative way

[ghworker2010]

when facebook starts to take valuable advertising dollars from google then watch the share price increase...

http://finance.yahoo.com/news/facebook-search-feature-could-threaten-150619874.html

[johnsjourney]

This data is from Google, but would you invest in this? http://www.google.com/trends/explore#q=facebook

It may be hard to believe, but it seems people are getting tired of the Facebook...

[ghworker2010]

This data is from Google, but would you invest in this? http://www.google.com/trends/explore#q=facebook

It may be hard to believe, but it seems people are getting tired of the Facebook...

dodgy data at its best. The graph on the vertical axis has no lable.

I think that its best to rely on data from facebook which legally releases its data to analysts and it all has to be audited etc. Remember all its users are registered and have a profile. (mau's -- monthly active users) increasing substantially each month.

[johnsjourney]

It's number of Google searches. So users may be up but the number of times the go in via Google is falling, which only means that.

No scale but you can compare with other sites like YouTube.

[johnsjourney]

Monthly active users might be going there less frequently within the month, perhaps.

We cannot know what is happening in detail but something negative is going on.

[HooHaa]

what does facebook produce ????

AIR

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

no, facebook produces data.

if you are unaware of the value of that, i cant help you.

[johnsjourney]

I use it every month but spend less minutes a day on it than previous years.

[namatjira]

Get a head start with the new Thai start up to challenge Facebook, it's called Savefacebook, it's a little more complex though

[davidst01]

5 months since I posted this thread and now the FB share price has popped the $100 level. I am very happy to have a small stake in a company that has a market cap of 288 billion. FB is now making moves to compete with Googles core search functions.

In the next few years we will see if the virtual reality oculus software takes off....

"One hates to be all breathless, but the ability for two people on opposite sides of the planet to feel like they are physically in the same room could represent one of the biggest changes in communications technology in years, maybe decades."

One day FB could enter China and this will cause explosive growth in the company.

FB is monetizing the platforms of its apps- Instagram and Whatsup messenger. The revenues derived from both these apps are increasing each year.

Facebook stock is a solid BUY

[WorkingTourist]

Your post five months ago was comparing Facebook to Google.

Since then Google is up 32% and FB is up 26%.

Facebook currently has a p/e ratio of 107. The current S&P 500 mean is 22. So the companies in the S&P 500 index make on average almost five times as much profit as Facebook compared to their valuation, and the valuation of the S&P 500 index is historically high (the historic mean is 15).

So for the FB stock to become as good an investment as your average stock in the S&P 500, they either need to increase profit per user fivefold, increase number of users fivefold, or a combination of the two. E.g. more than double both profit per user and number of users.

This however would only bring them inline with the companies in the S&P 500, and as said above, these companies seems to be a little overvalued.

So I don’t consider FB a “strong buy” because it is not clear to me how they will manage to increase their profit (more) than fivefold.

[siam2007]

5 months since I posted this thread and now the FB share price has popped the $100 level. I am very happy to have a small stake in a company that has a market cap of 288 billion. FB is now making moves to compete with Googles core search functions.

In the next few years we will see if the virtual reality oculus software takes off....

"One hates to be all breathless, but the ability for two people on opposite sides of the planet to feel like they are physically in the same room could represent one of the biggest changes in communications technology in years, maybe decades."

One day FB could enter China and this will cause explosive growth in the company.

FB is monetizing the platforms of its apps- Instagram and Whatsup messenger. The revenues derived from both these apps are increasing each year.

Facebook stock is a solid BUY

not invested in FB at this moment, but agree it is a solid BUY. DATA is the new Gold. one reason why FB fared pretty well during the recent meltdown in late August.

[ghworker2010]

I think its a buy as well. One of the best techie stocks that one can buy at the moment. What is the price going to be in 2 years time or 5 yrs time. $500 a share or more?....

[siam2007]

I think its a buy as well. One of the best techie stocks that one can buy at the moment. What is the price going to be in 2 years time or 5 yrs time. $500 a share or more?....

even if it takes 5 years to double from where it is now, it is still a very reasonable profit, me thinks. If the world goes under before that happens - "stop/loss" tools come handy....

[WorkingTourist]

Why would it double in five years?

Data being the new gold? Gold is worthless on its own, what will Facebook do with their data to generate profit? Because profit needs to go up a lot to justify their current valuation.

[advancebooking]

Why would it double in five years?

Data being the new gold? Gold is worthless on its own, what will Facebook do with their data to generate profit? Because profit needs to go up a lot to justify their current valuation.

Evidently WT doesn't understand how much the Virtual reality technology is going to bring to FB. Let alone Instagram....

Also, wait for FB entry to china. Zuckenburg is a smart guy. He is not visiting china for a holiday. I bet there is a plan to enter china soon.

Working tourist has his head in a box. He will be proven wrong in due course. He will wish that he had purchased some stock.

I think FB is a solid Buy and I intend to buy next week.

[WorkingTourist]

Why would it double in five years? […]

Evidently WT doesn't understand how much the Virtual reality technology is going to bring to FB. Let alone Instagram....

Also, wait for FB entry to china […]

Let me try again…

Right now the market cap. of Apple Inc. is $653b and profit for the last 4 quarters was $53b. That means that if you buy Apple Inc. (the entire company) and they keep business as usual, you will see a return on investment of about 8.2% p.a., plus you will own all their assets (their 460 stores, intellectual property, etc.).

Facebook has a market cap. of $292b. Let’s ignore the assets here and just look at their ability to generate profit. If they are as good as Apple, i.e. generating 8.2% of their market cap. then they should generate $24b/year in profit for their investors.

Their actual profit for the last four quarters was just short of $3.2b.

Above siam2007 made it sound like Facebook doubling its stock price is inevitable, to justify that, I would argue they need to increase their profit with about $40b. Do you disagree with this number? If so, what sort of profit do you think Facebook need to generate to justify their valuation?

If you agree on the $40b, do you think these will come from selling virtual reality head gear, more ads on Instagram, and Chinese users?

As for the latter, China already has a Facebook alternative, so I don’t think it’s obvious that Facebook will become big in China, furthermore, if Facebook currently have one billion users it means their revenue per user is just short of $15/year and with a gross margin of ~20% their profit per user is $3/year. So adding a billion new users will give them $3b more in profit, that’s still a far cry from $40b.

As for oculus rift, certainly looks promising, but other companies are also working on virtual reality, and I just don’t see that big a market for it. I.e. what is the use-case that will make it mainstream?

Working tourist has his head in a box […]

Really? I seem to be the only one looking beneath the surface.

[ghworker2010]

Why would it double in five years? […]

Evidently WT doesn't understand how much the Virtual reality technology is going to bring to FB. Let alone Instagram....

Also, wait for FB entry to china […]

Let me try again…

Right now the market cap. of Apple Inc. is $653b and profit for the last 4 quarters was $53b. That means that if you buy Apple Inc. (the entire company) and they keep business as usual, you will see a return on investment of about 8.2% p.a., plus you will own all their assets (their 460 stores, intellectual property, etc.).

Facebook has a market cap. of $292b. Let’s ignore the assets here and just look at their ability to generate profit. If they are as good as Apple, i.e. generating 8.2% of their market cap. then they should generate $24b/year in profit for their investors.

Their actual profit for the last four quarters was just short of $3.2b.

Above siam2007 made it sound like Facebook doubling its stock price is inevitable, to justify that, I would argue they need to increase their profit with about $40b. Do you disagree with this number? If so, what sort of profit do you think Facebook need to generate to justify their valuation?

If you agree on the $40b, do you think these will come from selling virtual reality head gear, more ads on Instagram, and Chinese users?

As for the latter, China already has a Facebook alternative, so I don’t think it’s obvious that Facebook will become big in China, furthermore, if Facebook currently have one billion users it means their revenue per user is just short of $15/year and with a gross margin of ~20% their profit per user is $3/year. So adding a billion new users will give them $3b more in profit, that’s still a far cry from $40b.

As for oculus rift, certainly looks promising, but other companies are also working on virtual reality, and I just don’t see that big a market for it. I.e. what is the use-case that will make it mainstream?

Working tourist has his head in a box […]

Really? I seem to be the only one looking beneath the surface.

perhaps working tourist has no idea what he is talking about...

http://www.profitconfidential.com/stock/fb-stock-facebook-inc-could-be-a-1-trillion-dollar-internet-powerhouse/

[MAJIC]

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.

Ive got a Ad Blocker on,but for some reason disappears on occasions,and I have to reinstall the program! maybe because it's a free program?

[WorkingTourist]

Working tourist has his head in a box […]

Really? I seem to be the only one looking beneath the surface.

perhaps working tourist has no idea what he is talking about...

Is the linked article meant to show that I don’t know what I am talking about?

It says “Facebook is not excessive at 37-times (X) its 2016 earnings”.

Whether a P/E ratio of 37 is excessive or not is perhaps subjective, though it’s definitely above the S&P 500 average, so “strong buy” with such P/E ratio is questionable.

But the current P/E ratio is actually 107.81 and to bring that down to 37 (in 2016) the profit needs to grow by almost 200% (and stock needs to stand still), which I don’t see any analyst predict.

So I am not sure what the point of your comment is.

[WorkingTourist]

Facebook board member cashing out, does not seem to think that he’ll double his money in 1-2 years:

Marc Andreessen, an early Facebook investor and board member since 2008 […] has offloaded more than 73 percent of his total ownership in the company

Source: http://recode.net/2015/11/14/marc-andreessen-sold-73-percent-of-his-facebook-stock-in-the-last-two-weeks/

[dsurin66]

Facebook board member cashing out, does not seem to think that he’ll double his money in 1-2 years:

Marc Andreessen, an early Facebook investor and board member since 2008 […] has offloaded more than 73 percent of his total ownership in the company

Source: http://recode.net/2015/11/14/marc-andreessen-sold-73-percent-of-his-facebook-stock-in-the-last-two-weeks/

Marc A is a known venture capitalist. He is likely to be using the funds to invest in a new startup. Him cashing in on fb shares bears no reflection on the company itself.

Today, FB stock trades at a little over 35 times its forward earnings. According to analyst estimates, the company is expected to grow earnings per share by 33% annually over the next five years. Analysts generally consider a stock cheap when its price-to-earnings multiple is less than twice its growth rate.

In the case of FB stock, investors are getting an outright bargain.

http://www.profitconfidential.com/stock/facebook-inc-3-reasons-to-be-bullish-on-fb-stock/

The above information disproves any bar stool theories put forward by W tourist.

FB is considered to be one of the hottest stocks on NASDAQ. Its 100% a buy!

[shirtless]

I am very wary about the stock market as i think it is over valued because of the cheap money available. what happens when interest rates rise and loans need to be repaid.

[WorkingTourist]

Marc A is a known venture capitalist. He is likely to be using the funds to invest in a new startup. Him cashing in on fb shares bears no reflection on the company itself.

I agree with you there, I posted the link mainly because the counterpoints to my look at the fundamentals was just countered with links to someone bullish on Facebook, so figured I’d show someone who isn’t bullish, and even a FB board member and early investor.

Today, FB stock trades at a little over 35 times its forward earnings. According to analyst estimates, the company is expected to grow earnings per share by 33% annually over the next five years. Analysts generally consider a stock cheap when its price-to-earnings multiple is less than twice its growth rate

The above information disproves any bar stool theories put forward by W tourist.

FB is considered to be one of the hottest stocks on NASDAQ. Its 100% a buy!

I didn’t present any theory to be disproved, I just put the numbers on the table. I.e. Facebook’s current valuation and their profit, and asked some reasonable questions about whether their valuation is justified and the expectation that the stock will double over the next 1-2 years (which is the title of this thread).

As for your quote, it seems to use the same P/E ratio as an earlier comment, which is based on expected earnings in a few years and then use this hypothetical future ratio to make claims about the present.

The rule you quoted states that generally if P/E ratio is less than twice the expected growth, the stock is cheap. If we expect 33% growth then that would mean a P/E ratio below 66 for Facebook should make it cheap, yet as even your link states, the current P/E ratio is above 100.

So I am not sure how the author can claim the current price is cheap, when 33% year-over-year growth for the next many years is already priced into the stock.

[davidst01]

Marc A is a known venture capitalist. He is likely to be using the funds to invest in a new startup. Him cashing in on fb shares bears no reflection on the company itself.

I agree with you there, I posted the link mainly because the counterpoints to my look at the fundamentals was just countered with links to someone bullish on Facebook, so figured I’d show someone who isn’t bullish, and even a FB board member and early investor.

Today, FB stock trades at a little over 35 times its forward earnings. According to analyst estimates, the company is expected to grow earnings per share by 33% annually over the next five years. Analysts generally consider a stock cheap when its price-to-earnings multiple is less than twice its growth rate

The above information disproves any bar stool theories put forward by W tourist.

FB is considered to be one of the hottest stocks on NASDAQ. Its 100% a buy!

I didn’t present any theory to be disproved, I just put the numbers on the table. I.e. Facebook’s current valuation and their profit, and asked some reasonable questions about whether their valuation is justified and the expectation that the stock will double over the next 1-2 years (which is the title of this thread).

As for your quote, it seems to use the same P/E ratio as an earlier comment, which is based on expected earnings in a few years and then use this hypothetical future ratio to make claims about the present.

The rule you quoted states that generally if P/E ratio is less than twice the expected growth, the stock is cheap. If we expect 33% growth then that would mean a P/E ratio below 66 for Facebook should make it cheap, yet as even your link states, the current P/E ratio is above 100.

So I am not sure how the author can claim the current price is cheap, when 33% year-over-year growth for the next many years is already priced into the stock.

I believe Mr W tourist will be proven wrong based on the recent strong quarterly results.

http://www.benzinga.com/analyst-ratings/analyst-color/16/01/6181821/mahaney-facebook-is-google-10-years-ago

FB is an innovative company with great potential. What will the stock be worth in 5 yrs. Who knows but based on current performance it will easily be double the current price.

[davidst01]

check out these price estimates for FB stock.

http://www.risersandfallers.com/2016/02/22/updated-price-targets-on-facebook-inc-nasdaqfb/

[Asiantravel]

warning potential revenue hazard ahead,,,,,,,,,,,,,,,,,,,,,,,,,,,,

Silicon Valley's Business Model In Jeopardy As Wireless Carriers Start Blocking Online Ads

Facebook says its service and phone companies are allies. Some telcos disagree.

carriers are rolling out the nuclear option: banning the very technology which makes companies like FaceBook and Microsoft's Skype profitable in the first place: online ads.

http://www.bloomberg.com/news/articles/2016-02-18/why-carriers-want-to-delete-whatsapp

Edited February 22, 2016 by Asiantravel

[ghworker2010]

The quarterly results were released yesterday and the stock took off:

http://www.forbes.com/sites/petercohan/2016/04/28/why-facebook-is-a-screaming-buy/?utm_campaign=yahootix&partner=yahootix#4e9b25de37ab

The most salient point from the above article is that ''And it has a bright decade ahead. By 2026, Facebook stock — which popped nearly 12% to $120.61 a share in pre-market April 28 trade — could be worth at least $1,000 a share.''

I knew that I was onto something last year.....

[davidst01]

On 5/18/2015 at 0:52 PM, chilli42 said:

That is an investment strategy doomed to failure.

You were wrong. Its 2 years on now and the share price has nearly doubled. Its up to $151. 

 

I think the stock has a long way to go and is cheap based on forward p/e

[davidst01]

On 5/19/2015 at 3:34 AM, gk10002000 said:

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 have been proven wrong on the sentence 'people will grow tired of it'. In fact MAU's have increased substantially on Fbook and Instagram (that fbook owns). People are not forced to 'sign up on fb'. They chose to do so everyday. Its a form of addiction and this is why the business model will not fail and the stock price will go up more.