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Facebook: I've Been Bullish A Long Time, But Now It's Time To Lock In Gains

May 03, 2021 4:58 PM ETMeta Platforms, Inc. (META)67 Comments
Gary Alexander profile picture
Gary Alexander


  • Facebook is among the few tech titans to see meaningful share price appreciation this year. So far, the stock is up ~20% in 2021.
  • Facebook recently reported very strong Q1 results, boosted by normalization in ad revenue.
  • However, I see potential risks in Facebook's user trends as growth in Facebook's most lucrative market, the U.S., stagnates.
  • Facebook is appropriately valued at ~26x FY21 EPS, with few near-term catalysts that can keep powering its recent rally.
  • Looking for a helping hand in the market? Members of Daily Tech Download get exclusive ideas and guidance to navigate any climate. Learn More »

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It hasn't been the easiest year in the stock markets for tech giants, but Facebook (FB) is sailing above its peers and doing just fine so far in 2021. The world's largest social

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This article was written by

Gary Alexander profile picture
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

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.

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.

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Comments (67)

A couple downgrades and here come all the negative pundits! Yes, FB always gets caught up in political tide, but it’s not going away anytime soon. Wait until VR and AR hit and they continue to grow Oculus and introduce new hardware. They’re not just a media company anymore.
I'm not so sure that it's time to 'lock in gains' because, as one example, the projected Job numbers were 1,000 but actually reported this morning at 260,000. To say the least, the government's economic pundits were caught looking like the building feel down on them and began shaking their Monitors to find more numbers.

This economy isn't anywhere near seeing a rise in short term rates, Imo. The Pandemic situation is improving but India and Brazil's catastrophe coupled with Red States essentially refusing to get vaccinated is another large Fly in the ointment.

The next several months is going to be a Macro economists W*dream, Imo..
Daytrader77 profile picture
Just when you thought the high flying stocks are getting hammered.

FB is trading a All time high..

Rough ride ahead in the next 3 weeks!!
The best time to sell FB is...never.
Remember Myspace? It's only a matter of time Facebook follows their path. When the next big social media space comes out and everyone migrates there Facebook will be obsolete.
@Tyrantjo Do you even know the company Facebook?
Since Facebook started more than 15 years ago there were a lot of other social media spaces (Instagram, Snapchat, Twitter, Pinterest, Tik Tok, and so on). Still the development of Facebook was fantastic.
Interestingly, Myspace had a couple opportunities to buy Facebook (the first one for a mere $75 million), and declined both of them. Facebook won't make the same mistake.
@hvanheiden and Facebook bought Instagram.
Tondog profile picture
I could see maybe not loading up on more..."backing up The Tacoma so to speak"...buy why sell if you already own, you'll have to pay a bunch of tax and FB has something like $9 / shr in cash & investments and NO debt... a company having no debt is just like a person having no debt...it's incredibly rare & basically means they can fund their life off of their income and don't need to suck anyone off for a loan; i.e. when you finally find a good women hold on to her!
Thomas Richmond profile picture
@Tondog well said
Facebook might be cheap for good growth, just remember the political implications. I'm a millennial who grew up with Facebook and was pretty much forced to use it. Almost everyone I know is looking for a reason to stop using it. There is a lot of risk because of this company's risky and careless behavior. I actually just got done asking a friend if we had another option before posting.
quotation profile picture
Novi and Facebook Payments teams were merged in March.

US Gov needs Diem (prev Libra) to launch asap, and Novi to switch it's wallet to the stablecoin network bringing tokenized USD payments to all Facebook assets - Instagram, WhatsApp, Messenger, etc.

Unlike China CBDC, US will rely on private sector and Facebook is strategically important. Stock will run.

It'll play out still before end Q2...
Joseph Diamon profile picture
Really great article, I agree but with a caveat. The valuation of FB compared to the rest of the market is still a decent bargain compared to alternatives. In a vacuum, it's a sell... In today's market - it's a buy
My master's thesis was about the ROI of Facebook. I pretty much covered and mentioned all the points you pointed out and as for rev growth came to the conclusion:

Either FB is charging more for the ads (hence lower ROI in the future)
Or Insta and Audience Network is generating a lot more than we think.

BTW, one small mistake, the Cambridge Analytica scandal surfaced in "2018", not "2019" (FB shares dropped 19% on 19 May 2018, the day after).
Kyle Fishman profile picture
Facebook is an evil company that doesn't care about its users.
how come they have no customer service/tech support for people to contact them when they get locked out of their accounts???
@Kyle Fishman Our small business is thriving because of $FB..so...
@Kyle Fishman Evil or not But I like Facebook because it has made me more money then anyother stock.
@kiwicarrotcake Their are millions more whose businessess have been thriving due to Facebook.
It is only a small fraction of people who missed the bus that are critisizing the company.
Come to India and other such countries to know how much popular Facebook is. Almost 80% of internet users are using one or the other Facebook apps.
At some point, Trump will come out with (or brand) an alternative and half the country will move there. I’m not a fan of trump but dislike zuckerberg and FB censoring even more
@blorber as a. Old amen, I find the censoring horrifying. I’m an adult , even got fancy degrees, I can make my own decisions I don’t need a censored help
CarrboroSA profile picture
1/2 the country won’t migrate because trump never had support from over 50% of the country. He never won a popular vote and his approval ratings always hovered in the 40’s.

That’s not meant to be a political dig. It’s meant to recognize how extreme and polarizing trump was.

He has his loyal following of about 30-35% of the public. The country is divided, but it’s not 50:50.
ATS Investment profile picture
FB is never a sell.
I like to add more to my winners versus selling. FB is going to do nothing but grow and grow.
@MojoRisin1 I agree with your views.
Facebook is a BUY on every dip.
Shamanski profile picture
I don't own FB, but now is when you buy/hold, not take profits. FB is firing on all cylinders right now and is very undervalued.
:/ <--- Me, when I see that cash & cash equivalents ($64B) was not backed out of the PE ratio provided.
ANY Technical analyst or practitioner of Elliot Wave Theory will tell you that FB just ended its 5 th wave and It may chop around for a bit for few months (it is called ABC corrective wave) before legging up higher.
Elliot wave is based on 5 waves, where waves 1,3, and 5 propel stock higher while waves 2 and 4 bring stock down to earth and shake out weak hands before heading higher. After wave 5 , correction ensues for a time in a zig zag fashion before a good and healthy stock resumes another 5 waves higher.
Check this out and hopefully all of us learn some Technical Analysis and be an investor instead of being a trader.
The real concern is how will Apple's new policy affect Facebook revenue going forward? Nothing else matters.

Forward PE of 22 with revenue growth of 47% for the latest quarter.

Monthly active users: Facebook 2.7 bil, Whatsapp 2 bil, Instagram 1.2 bil.

CEO is an owner operator and the largest shareholder in Facebook.

brettze profile picture
The way you look at FB on your PC screen or your phone won't be same five years later.. I have no idea what it will look like. All the social norms, we are using today will just disappear later.. This is what social media mean..
FB is the only one figuring it out.. Who else?? Google are still run by two old fart university dropouts or post graduates still keeping YouTube ... Most kids would rather work at FB than Google because much of Google will have to be torn down and rebuilt to be alike ... who would want those kinds of jobs?
Communication infrastructure is still lagging behind in terms of speed. and it is the only thing that drags FB down. ATT the great great great great granddaddy of communiciations is finally beginning to install fiber at a 'quickening" pace after reallzing that fiber is supposed to be bread butter for ATT as well as others like Verizon.. Comcast is thriving on ignorant customers who still think they are viewing 4K on their new UHD TVs.. Not! unless their cable inside their homes are upgraded to triple shielded cables that is necessary for HDMI speeds.. or they are leaking ..High speed cables are not cheap! Most of our existiing cables in our homes are already obsolete and slow! Comcast has a lot of work to do..
I welcome any challenge from you readers on any of my facts here.
brettze profile picture
Those FB kids cannot be trained to use screwdrivers, hammers. etc like we were long ago.. Their tools are keyboards..
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