Wednesday, November 21, 2018

Facebook (FB) at $130 Trading at 17 Times Forward Earnings.

Facebook (FB) at $130 is trading  at a very attractive entry point at 17 Times Forward Earnings.
FB is valued at ~$360B excluding excess cash which is a very attractive price for a dominant company in its industry of Social Networking and Advertising. FB has strong products including FaceBook, Instagram, Whatsapp, Messenger. Instagram and Whatsapp will  be monetized over the coming years. FB also has 19% market share in the fast growing online advertising space with GOOGL having 37% share and AMZN catching up with 5% market share.

Even assuming reduced margins going forward for FB due to increased spending for security and impact of regulations for a company that can grow revenue and earnings 20%+ for next 5+ years $130 and $360B excluding cash is an attractive price. Any additional innovation by FB can add additional upside. Projected FB target price 3 to 5 years out from Oct 2018 is $250 to $350.

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