Reports Of Facebook's Death Are Greatly Exaggerated
Summary
- Facebook may be under attack, but it's barely wounded.
- And it's not in the throes of demise.
- The long-term trends all favor social media's ongoing growth and higher values in the future.
On July 26, 2018 Facebook (FB) set a record for the most value lost in one day by a single company. An astonishing $119B of market value was destroyed as the shares sank more than $40. For many investors, it was the sky falling.
As most of you know, I've followed Facebook closely since it went public in 2012. And, I've long been an admirer. I said buy it at the IPO, and I'm saying buy it now. Click on the title of any of the posts to read the full content.
- June, 2012 Buy Facebook Now - Catch a Lucky Break
To summarize, Facebook may be under attack, but it's barely wounded. And it's not in the throes of demise. The long-term trends all favor social media's ongoing growth and higher values in the future. Below I'll offer some of my previous blogs that are well worth revisiting amidst the current Facebook angst.
FANG (Facebook, Amazon (AMZN), Netflix (NFLX) and Google(GOOG (GOOGL)) investing is still the best bet in the market. They have outperformed for years, and will continue to do so. Why? Because they are growing revenues and profits faster than any other major companies in the market. And "Growth is Good" (paraphrasing Gordon Gekko.) If you have any doubts about the importance of growth, go talk to Immelt of GE (GE) or Lampert of Sears (SHLD).
- August, 2015 - F.A.N.G. Investing Makes Sense
- April, 2015 - Why You Want To Own Facebook Rather Than Google
- April, 2016 - Facebook's Surge, Apple's Slide and Chipotle's Stall - It's All About Growth
Don't forget, for years now Facebook is more than Facebook.com. It's smart acquisition programs have dramatically increased the platform's reach with video, messaging, texting and eventually peer-to-peer video. Facebook's leadership has built a very adaptable company, able to change the product to meet growing user (and customer) needs.
- February 2014 The Smart Leadership Lessons From Facebook's Whatsapp Acquisition
- April 2017 Why You Should Own Facebook and Not Snapchat
- May 2017 The Trend to Facebook Referrals Is A Risk To Google Search
- February 2018 Are You Adaptable Like Facebook?
Facebook is on a path toward significant communication domination. Facebook today is sort of the New York Times, Washington Post, Los Angeles Times and about 90% of the rest of the nation's newspapers all in one. Nobody is close to challenging Facebook's leadership in news distribution, and all news is increasingly going on-line.
- December 2017 Facebook's Path To Communication Domination
For all these reasons, you really do want to own Facebook. Especially at this valuation. It's getting a chance to buy Facebook at its value when the year started, and Facebook is that much bigger, stronger, and adapted to changing privacy regulations that were still a mystery back then.
- May 2018 Why You Want To Own Facebook
Oh, one last thing (paraphrasing Steve Jobs). Facebook actually isn't the biggest one day drop in stock valuation, despite what you've read.
Stocks are priced in dollars, and dollars are subject to inflation. So we should look at historical drops in inflation adjusted dollars. Even though inflation has been mostly below 3% since the 1990s, from 2000 to today the dollar has inflated by 46%. So inflation-adjusted, the biggest one day value destruction actually belongs to Intel (INTC), which lost $131B in September 2000. And Microsoft (MSFT) is only slightly in third place, having lost $117B in April 2000. So keep this in mind when you think about the long-term opportunity for Facebook.
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Comments (52)
www.amazon.com/...
the climb.
am sorry I didn't buy more along the way up... Established
tiny position in my fund based PF at about 158 earlier this
year and held since then. Would like to add more.
Is this still the time to do that...177-78 this week... or wait
for another dip? Thanks!
Is FB useful to advertisers?
Will FB be here with us leading social media for the next 5 years or more?
Does its porffolio (WA, etc) have monetization potential?
Will FB and Its portfolio be a fundamental MKT vehicle for SMS business and Corporations for the next 5 years? If so, forget Mr. Market in the next q3 CC. You are long, so you should not be worried, you undestand FB and Its fundamentals. Don’t forget FB is for about 12 years doing this and growing like crazy. It’s the leader, it It’s a monopoly, monopolies has pricing power, so ARPU will keep growing q after q. A no brainer. I think WA will be the next super star.
I never listed to doom sayers, shorts or bears.
whatsapp start to make monet..
the china government approve fb to open a subsidiary..
what about the dating application that mark talk about (and already have a 2.5B users)..
and believe me i can keep going on and on....
very very long fb!