I added more to my position today in Facebook Inc (FB) at $157.73.
Now my 7th largest holding. I still think at this level, it’s a great opportunity.
The recent pullback again brings the price to lower than my previous purchases. I imagine this is due to recent issues with hacked accounts, more spending on security/privacy which will lower earnings in the short term and of course the data leak scandal. I believe the fears are overblown and this poses a good opportunity.
I mentioned in the my previous post/purchase that if the price should continue to drop, I would consider adding more and that I would be willing to double my then current position. That’s what I just did today. This purchase doubles my total holdings in Facebook.
I added more to my position today in Facebook Inc (FB) at $160.32.
Now my 8th largest holding. I still think at this level, it’s a great opportunity.
The recent pullback again brings the price back to near my first purchase. I imagine this is due to the earnings release coming out later today and fears over the impact of the news feed changes and data leak scandal. I believe the fears are overblown and this poses a good opportunity.
As for the newsfeed changes. I feel that reducing page based content should help boost revenue/earnings in that pages will need to rely on paying to have their posts shown.
However, if they should have made an impact the price continues to drop, I will consider to add more at lower prices depending on the severity of the news and impact to the business. I would be willing to double my current position from here.
I initiated a new position today in Facebook Inc (FB) at $159.80.
I’ve been following Facebook for some time as I’m a regular user and I utilize their advertising platform for our own and client businesses. I feel their advertising platform is a very good value and great for targeted campaigns to build awareness. I also use Google for advertising more for campaigns targeting those ready to buy or with a specific need in mind. I have higher budgets with Google than I do for Facebook campaigns. However, Facebook & Instagram (which Facebook owns) campaigns have been steadily increasing in share of total budgets. Most recently have I have been using Facebook’s remarketing campaigns which is where you target people that have already visited your site. You then place ads to encourage them to come back to your site. These are particularly powerful as these visitors have already shown interest in your offer. Both Facebook and Google do this well. However, overall I think Facebook’s ability to target within their advertising system is better than Google’s at this time and the value is better.
Reason for current opportunity
The share price for Facebook has been under a lot of pressure due to the recent scandal involving a data breach with Cambridge Analytica and the Federal Trade Commission’s announcement of an investigation into the company’s abilities and willingness to protect user information. It has been said that the negatives of this are overblown and that any downside is already well priced into the current stock price. The platform is still very strong and there doesn’t seem to be any signs that revenue/income will not continue to grow.
Facebook is the largest social media company in the world with more than 2 billion monthly active users. They have continued growth in users and user engagement. Their platform provides advertisers an extremely valuable tool to target customers. They have been successful where most of the peers such as Twitter and Snapchat have not. They have the capital and earnings power to continue to innovate and acquire firms that may supplant the flagship Facebook.com website in the future, as they did with Instagram.
Facebook currently trades at a 22.2 forward PE and PEG of 1. The PEG payback in years is 7.9. They have impressive margins and revenue/earnings growth. I feel at this price, there is little risk and a high probability the value of the company will be much higher years from now.
I believe the current stock price drop represents a great opportunity for those not currently invested or with a small position in Facebook. If the price should continue to drop, I will most likely add to this initial position.