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Facebook: Too Much Fear, Strong Sell-Off, What To Do With My Shares

Mar. 02, 2020 4:34 PM ETMeta Platforms, Inc. (META)34 Comments


  • Historic market sell-off, why investors should act on this opportunity.
  • Why Facebook is one of the best investments in tech right now.
  • In time, investors will look back to today's price as being extremely cheaply priced.
  • Looking for a helping hand in the market? Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. Get started today »

Investment Thesis

Facebook (FB) is one of the best investments in tech at this price point.

More bad news related to coronavirus may continue to unfold in the coming weeks, but this fear is already priced in. Facebook is a strong free cash flow generating company that makes for a very compelling investment. Here's why I'm bullish:

Want to Strong Returns? Then, Change Your Thinking

Investors would be better served by changing their thinking as markets are met by this historic sell-off.

Rather than looking at Facebook's shares being 10% compared with 2 weeks ago, investors would be better armed by reframing the question: what is the likely impact of coronavirus on Facebook 's long-term prospects?

Furthermore, rather looking at the share price and thinking that they are still holding a gain or a loss, investors would be better rewarded by thinking about how Facebook is likely to perform two years out?

Will Facebook still engage about 2 billion monthly active users? Will Facebook still be a highly free cash flow generative company? Will Facebook continue to gain traction in diversifying its revenue stream? All three questions are answered with a resounding yes. But isn't there more bad news coming?

Further Bad News Expected?

Probably! There is always more bad news in the wings.

In reality, high-quality businesses don't go on sale when their outlooks are great. Businesses go on sale when there is bad news in the air, combined with plenty of uncertainty.

In fact, I contend that the distinguishing characteristic between the average investor and the great investors is experience. Novice investors wait for the perfect theoretical entry point to act. Professionals know that an ounce of practice is worth a ton of theory, that the perfect entry point will never come - however, buying the 'fear' works very well.

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This article was written by

Michael Wiggins De Oliveira is an energy specialist whose primary focus is capitalizing on “the Great Energy Transition” - the confluence of decarbonization, digitalization with AI, and deglobalization - to achieve greater investment returns. Through his 9+ years analyzing countless companies, Michael has accumulated outstanding professional experience in the energy sector and a following of over 40K on Seeking Alpha.

Michael is the leader of the investing group Deep Value Returns. Features of the group include: Insights through his concentrated portfolio of value stocks, timely updates on stock picks, a weekly webinar for live advice, and "hand-holding" as-needed for new and experienced investors alike. Deep Value Returns also has an active, vibrant, and kind community easily accessible via chat. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (34)

shoff profile picture
05 Mar. 2020
FB has the chance to do some great PR during the coronavirus pandemic by providing a platform for positive community outreach. Is that being discussed? I am putting my blinders in for certain stocks during this except for selective buying so I don’t know if this is being discussed.
So how this corona thing is going to affect Facebook? I assume people are going to spend more time on social media
M5 Dave profile picture
Hope your right, I waited a day but pulled the trigger today, right at closing bell at session low near 186.
Alfred Einstein profile picture
I do think FB is a good candidate for a quick recovery and I’m looking to buy some shares. If anything they stand to benefit from less physical interaction and the stock was already pretty cheap. It’s hard to know when to add, and Google is my largest position, but I will look to buy some Facebook once things calm down, at least for a trade.
Alfred Einstein profile picture
I'm going to pull the trigger on some of this today. The market will probably be down another 3%+ today and will almost certainly be down again tomorrow, so I'm not going all in just yet, but this company actually stands to benefit from coronavirus and yet it hasn't outperformed the overall market at all since this whole thing started. That is an opportunity for people who don't just buy and sell index funds.
Couldn’t agree more. Have been adding more shares recently.
Thanks for the article. Agree on future of FB, but you should rename the title: What to do with YOUR (not "my") shares, since you don't have any based on disclosure!
Knowing and not acting is the same as not knowing. Well said!
Michael Wiggins De Oliveira profile picture
Thank you so much for reading my piece @schmiddlearth
A_Fava profile picture
FB not really impacted by the virus as its death toll mainly resides in China. Needless to say the company is a money making machine and under $200 is a steal.
the whole market had already a technical sell so this dead cat bounce it will end by another huge sell, at this end may be sure FB will be cheaper
Under 200 is a steal, agree 150%
It can still be affected if the entire economy drags, and there are already signs that some businesses will be dramatically affected in the near term. It’s true that people will still use FB, probably even more than usual if they are working from home, etc, but companies tend to spend less on advertising during a slowdown, which would obviously hurt FB. I’m still long btw, but this crisis can definitely put a dent in the stock.
I assume advertising go down during a recession?
This would hurt Facebook- right?
I think it will hurt FB, but not as much as others, and it will be temporary. A lot of advertising on FB is e-commerce and online-based products. With the next recession, I bet we will see the definitive win of e-commerce and online advertising over traditional brick-and-mortar retail and traditional advertising
The only thing that has happened so far in postponement of their annual gathering. That will hurt but it will certainly come back. I bought in at the IPO and 6 times more. Target is still 350.00 a share.
They will also get certain positives that will more than offset any negative. As more people stay at home, more people use social media, such as Instagram and Facebook etc. which equals more ad impressions equals more $ for facebook.
Also keep in mind it’s price isn’t based on the next quarter but the next few years. Trading at pe of 17 and easily growing at 20+ for the next several years, given the amount of cash on its balance sheet, IMO fb is dirt cheap and highly undervalued.
necto profile picture
I think your article was one day late, but we realized that you were preparing for the worst.
was a shareholder of this company, I think it will go lower even with a growing market. Or he will accelerate the monetization of Instagram and whatsapp or Facebook shares will cost $ 150
snowghost78 profile picture
In your dreams maybe.. I'm hoping to be put at 150. I missed last drop and lets see I would have only picked up $72 ish a share US . Coverted to Canadians at a 1.33 not a bad chunk of cash to add to my position. Maybe i will get lucky this panic sell off. Opps looks like its holding in the 190's Eh!
I don’t really understand why FB should sell off in these circumstances. It really is not affected by the virus, maybe to the contrary is benefiting from it indirectly as more eyes are at home and are glued to their phones, and it was not overpriced to begin with like most other stocks. I guess this company is simply not in favour with Mr Market these days, no matter what
Yes it would actually benefit as more people stay home and use more social media
FB is a major stock therefore tied to all the major ETFs and mutual funds, so it’s going to go down if the overall market goes down. Long term it’s still a screaming buy.
Good comment. Long Facebook.
Today’s rally is the answer!
- Go long to stay strong 💪 and buy the “inflection” dips.
- Patience is the prudent investor’s greatest ally, and it goes a long, long way with a great 👍 business like FB, or; for all the great businesses of our time... when you think of it.🖖
Bought more this morning
Buy more
Quiet Man profile picture
Click bait. Again. How many more times?
Sell off? Well.....I guess the media got their way. While you decide how to spend your shares; I’ll be buying more. Thx all.
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