Seeking Alpha

The Uneven Scrutiny Around Facebook (Podcast)

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About: Facebook, Inc. (FB), Includes: AMZN, CRM, DIS, FOX, FOXA, GOOG, SHOP, TWTR
by: The Investing Edge
Summary

Facebook sold off after earnings, and there appears to be a consensus around the buyside that the stock should be bought.

At the same time, Facebook comes in for much criticism that, while perhaps deserved, appears disproportionate to what its peers face.

The question is whether that mismatch creates upside.

by Daniel Shvartsman

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Facebook (NASDAQ:FB) entering an election year is about as hot-button a topic as there is in the market, at least outside Tesla (NASDAQ:TSLA). Akram's Razor, author of The Razor's Edge and my co-host on this podcast, has called it a compelling buy on two previous podcasts this year, and after the company sold off on its earnings, it seemed a good time to revisit the story in full. With comparisons to Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL), as well as news media and the inevitable diversion into the issue of political ads, we try to tease out the case for Facebook.

Topics Covered

  • 1:30 minute mark - Is Facebook a consensus buy despite the selloff?
  • 9:00 - Pulling in Amazon as a proxy
  • 14:15 - Amazon, Facebook, Google and the tech conglomerate benefit or discount
  • 18:30 - Facebook's PR challenge vs. their profit rush
  • 26:30 - What is Facebook's "product"?
  • 34:00 - Drilling into what's different about the modern tech companies vs. traditional media
  • 44:00 - The actual effect of the scrutiny on Facebook's business - opportunity set and costs to overcome
  • 52:30 - Finalizing the scrutiny arbitrage play, the e-commerce upside, and the $300 stock trading for $200

Disclosure: I am/we are long DIS, GOOG. 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.

Additional disclosure: Daniel is long DIS and GOOG. Akram's Razor is long FB, AMZN, and GOOG, and short SHOP. Nothing on this podcast should be taken as investing advice.