It’s time to talk about one of the great FAANG stocks. Here is the breakdown of $FB, otherwise known as FaceBook!
Current Price: $286.8301
52/Wk High: $304.67
52/Wk Low: $137.10
Market Cap: $816.2 Billion
Read below for the breakdown!
Facebook is one of the largest social media companies in the world connecting a whopping 42% of earth's population through technology.
Facebook continues to see double digit growth and management seems to only know the word expansion in recent years, acquiring several major assets along the way.
In recent news Facebook acquired CRM startup Kustomer for just over $1 billion. Management noted that this acquisition will add even more services to small businesses on the platform and expand their possibilities.
When breaking Facebook stock down it's quite easy to see where Facebook's core business sits. According to TREFIS (@trefis), 93.39% of $FB stock is based on the company’s Core Facebook Advertising segment.
Furthermore, just 1.0% of the stock price is based on the Payments, Fees, and Oculus segment, all the while 5.2% is based on cash.
Shifting into earnings, Facebook beat third quarter expectations, delivering a $2.71 EPS (Up 28%) versus the EPS consensus estimate of $1.91 for the third quarter.
Facebook also managed to see double digit growth under the hood once again. Facebook reported Q3 revenues of $21.470 billion, representing a 22% increase year over year.
Breaking those revenues down, $21.221 billion came from advertising revenues, while just $249 million came from other revenue streams.
On the downside, total costs and expenses increased by a whipping 28% in Q3 to a total of $13.430 billion. On the flip side, income from operations increased 12% to $8.040 billion. Net income continued to increase as well by 29% to $7.846 billion.
When it comes to the user numbers Facebook continued to see growth. Average daily active users increased by 12% to 1.82 billion, monthly active users increased by 12% to 2.74 billion, and family daily active people increased by 15% to 2.54 billion.
Management delivered notable expectations for Q4 but the outlook was slightly disappointing. While management does expect revenue growth to be even better than Q3, Apple's IOS 14 and antitrust worries were a major negative.
Digging into the balance sheet the numbers are quite good.
Total Debt: $528 million
Total Liabilities: $28.706 billion
Total Assets: $146.437 billion
Cash & Short Term Inv: $55.620 billion
Given the numbers the stock has run big time this year but the valuation has yet to be over done.
Price to Earnings: 32.94x
Price to Sales: 10.02x
Price to Book: 6.73x
Price to Cash Flow: 20.65x
Management has also been quite effective throughout the past several years.
Return on Equity: 23.87%
Return on Assets: 18.66%
Return on Invested Capital: 20.58%
Taking in the numbers the analysts remain bullish with the mean price target sitting at $323.18/share, representing 12.78% growth.
Furthermore, the high price target is $375.00/share, representing a 30.78% gain, while the low price target is $270.00/share, representing a -5.78% loss.
The big money is also quite involved, with 77.99% of the stock being owned by institutions. Top holders include The Vanguard Group, Fidelity Management and Research, and BlackRock Institutional Trust.
When it comes to the technicals Facebook stock could be flashing an opportunity. According to the six-month charts the MACD looks to be moving back to the upside within a right range around 1.37.
The six-month charts are also indicating an RSI of 59.38 and CCI of 86.01both of which are higher but not too far gone. It is also important to note that $FB trades roughly 18 points off its highs.
In short Facebook is a solid long term play and it's hard to see the company going anywhere. With double digit growth expected to continue and limited headwinds Facebook will likely continue its long term uptrend.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.