Entering text into the input field will update the search result below

Why Facebook Is Still Not Worth $174

May 01, 2018 12:46 PM ETMeta Platforms, Inc. (META)73 Comments
Jae Jun profile picture
Jae Jun


  • The media had its fun during the month long stint and is grasping at straws for attention.
  • Master of Valuation Prof. Damodaran's take on Facebook, the assumptions he has used and what story he applies to value the company.
  • Our look at Facebook's valuation using a different valuation technique by taking a base, bear and bull case scenario to show the fair value after earnings is around $210.

Facebook is back.

The charade lasted about a month and the media is still grasping at straws, but Facebook (FB) retaliated and threw porridge in the face of doubters.

Here's some of what Facebook was cooking in its porridge which you can find in the earnings release and more detailed 10-Q.

  • Revenue was up 49% vs same year-ago period
  • Net income up 63% vs same year-ago period
  • Daily active users (DAUs) were 1.45 billion on average for March 2018. 13% increase year-over-year.
  • Monthly active users (MAUs) were 2.20 billion as of March 31, 2018. 13% increase year-over-year.
  • Mobile ad revenue represented approximately 91% of advertising revenue for the first quarter of 2018, up from approximately 85% of advertising revenue in the first quarter of 2017.

Couple of facts jump out when reading these numbers.

1. People didn't delete their accounts. The network effect is too strong. I tend to throw out the word "moat" too often which is wrong, because most companies don't have a moat. But in Facebook's case, their network effect moat is so strong that Cher, as a user herself, backpedaled. She and other celebrities jumped on the #deletefacebook wagon and although she may have deleted her personal account, turns out she didn't want to lose those 2.4M people who like her page.2. Facebook is a clear #2 in online advertising. Online business has become so competitive that without advertising, these online businesses have no way to acquire customers. People tend to think brick and mortar stores have too much overhead, but it's now at a point where advertising is essentially the new "rent" in the online space.

Amazon is continuing to expand their own ad platform and I wouldn't be surprised if they become #2 with 5 years, but for most advertisers, the only worthwhile place to advertise

This article was written by

Jae Jun profile picture
We seek undervalued and under-appreciated stocks to go long before the market catches on. By using our universe of stock ratings and methods to quickly compress our list, we look for the best opportunities to build wealth through the stock market.

Analyst’s Disclosure: I am/we are long FB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

all images have been credited and linked as requested.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.