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Facebook Stock: Be Greedy When Others Are Fearful

Oct. 06, 2021 8:00 AM ETMeta Platforms, Inc. (META)73 Comments

Summary

  • Facebook Files and an outage have hurt Facebook's stock. The company's value has dropped by a massive $150+ billion over the last month.
  • This seems widely overblown, as Facebook could weather this without harm if history is a guide -- the company has done so again and again.
  • At current prices, FB stock looks heavily discounted, and total returns from the current price should be attractive.
  • Looking for a helping hand in the market? Members of Cash Flow Kingdom get exclusive ideas and guidance to navigate any climate. Learn More »
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Article Thesis

Facebook (FB) has experienced a share price decline over the last couple of weeks, based on worries about the so-called Facebook Files and some technical problems. Even before that, shares were very inexpensive, and now they are looking even better. I believe

Is This an Income Stream Which Induces Fear?

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This article was written by

Jonathan Weber profile picture
49.27K Followers
Jonathan Weber holds an engineering degree and has been active in the stock market and as a freelance analyst for many years. He is an active author on Seeking Alpha since 2014.    
According to Tipranks, Jonathan is among the top 1% of bloggers (as of August 1, 2023). 

Jonathan is interested in income stocks and value stocks primarily but does also follow some growth stocks. 

If you want to reach out to Jonathan, you can send a direct message here on Seeking Alpha.

Disclosure:

I work together with Darren McCammon on his Marketplace Service Cash Flow Club.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of FB either through stock ownership, options, or other derivatives. 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 (73)

Bold Investments profile picture
FB will overtake Amazon in Cap by 2030. Wait until WhatsApp & Oculus REALLY get going. Ignore the news, buy the numbers
A
@Eric Groovenhoff I agree with your views sir.Three Cheers for Facebook.
M
There’s tremendous irony wrapped in this FB riddle. The legions of “free expression” at any cost might not fully appreciate what’s operating under FB’s hood far from their AI understanding. A ultra intelligent apparatus with super advanced learning capabilities is tracking your every thought, inference and mouse click. Every single day of your life your most personal information is being absorbed into their mainframes and manipulated and packaged back out to you in the form of stimuli FB wants you to consume, digest and respond to. I find that a pit troubling to say the least.
j
I would like to see a lot more "controversy" so as to load up on shares. Let's really crank up the rhetoric. Surprised Pelosi hasn't ratcheted things to the next level so that her husband can improve his cost basis.
A
@jemicarus All the bad news has more or less been priced in.It has fallen as much as it should, now buying interest has emerged at lower levels which will take it back to the all times high soon.
L
I just added some more FB.. This company just keeps on growing!
P
GOP is ok with hate speech and division, they thrive on it since they can’t win with fair elections the must cheat with lies and conspiracy theories. GOP
LOVES FB.
P
@Jonathan Weber because it is totally relevant.
E
I was under the impression that the possible negative impact of the Apple changes inItiated the stock price decline?
Jonathan Weber profile picture
@Enrique rodriguez bustelo that might play a role as well, but not for the price decline in the last one to two weeks
bengalesq profile picture
A good company but really under the microscope right now. Doesn't look like it's going away any time soon either. I am looking at a historic PE and it was down to 17 at the end of 2018. Popped to low 30 in 2019. Mid 20s seems the new normal here and this was before all the recent issues. A tech bubble pop will drag down all the ships - most likely even out of tech - and certainly FB. There's risk there. There's regulatory risk now as well (reminds me of the China stocks just in a different way) so that's in the cake mix here too. Sure, it was trading at 380 a month ago but it was at this exact level only 3 months ago and pre-covid it was at 210. Decent values do not mean they can't go lower (just ask my China stocks). I think this is a wait and see stock. Wouldn't surprise me if it traded at 250 in 6 months.
Jonathan Weber profile picture
@bengalesq thanks for sharing. Do you think a tech bear market is likely?
bengalesq profile picture
@Jonathan Weber Inevitable. Question is timing. I've had thoughts about a decline for years now though so don't listen to me. I'm apparently Chicken Little.
T
I really dislike what Facebook is and its impact on society. Closed my account 12 years ago and it was for the best. Having said that, as an investor i see a good opportunity here. Fairly priced at current levels. Planning on buying long term calls.
Jonathan Weber profile picture
@Tartaro thanks for sharing! One can buy even if one doesn’t like the product
M
If you are truly in favor of free speech and free expression then listen to the testimony of that data scientist from yesterday. Listen to her speak and then be willing to discuss conceptually what it means to have free speech.
G
Great article. FB is a clear BUY. Don’t hate the player, hate the game (society).
Jonathan Weber profile picture
@Gferna12 Glad you liked it! Happy investing
BM Cashflow Detective profile picture
Facebook is merely the provider of freedom of expression.

Not the opinion maker.

It is the reflection of current society in which it can see for itself what it is missing.

Unfortunately, many cannot stand that.

Not Facebook's fault.

One shouldn't be so scared when people have different opinions.
I
@BM Cashflow Detective you must not have watched the whistleblower’s testimony. The problem is not what is posted on FB, it is that FB’s algorithms amplify, spread and promote the most negative, hateful, and hurtful content AND FB can’t seem to turn off the algorithms negative amplification even when they try.
Facebook is not the actual market square where anyone can post a hurtful message on a wall that you may not see because you never go to the wall. Instead, Facebook’s algorithms find the messages that you will most react negatively to, and drives that message on a wall right to your eyeballs. And it does it over and over again.
Edward J. Roche profile picture
@BM Cashflow Detective Great comments. People were burned at the stake for saying the earth went around the sun. Let's not repeat that stupidity.
I
@Edward J. Roche it is being repeated. headlines:

“Mobs are killing people in India based on false rumors spread through WhatsApp” - PBS July 15, 2018

“Like. Share. Kill.
Nigerian police say false information on Facebook is killing people” - BBC 11/13/2018

“Bangladesh lynchings: Eight killed by mobs over false child abduction rumours” - BBC 7/24/2019
BM Cashflow Detective profile picture
If you want to know the value of stocks, try buying some from fearful sellers.

When it comes to shares, there is only one catchphrase:

"More!"

TTM ROC (Joel Greenblatt) 79.94% / very good 5-year forward PEG ratio 0.93 = 85.96% actual ROC including an additional free leverage due to growth prospects that are not priced in of 6.02%.

After then, a "Super Magic Formula Stock" of the 1st class with very high equity growth potential.

Of course, I took advantage of the situation and bought Facebook shares.

Now i can tell. I'm long $FB

Because healthy greed brings increasing prosperity.

So I definitely got to know the value of stocks.
I
@BM Cashflow Detective greed by definition is not healthy.
BM Cashflow Detective profile picture
@InvestinBBB

By what definition and by whom?

Greed is part of one's own personal freedom of action.

It only ends where it restricts the freedom of others.

In fact, your own greed does not do that in any way when buying stocks.

But what this greed does by buying stocks is taking care of your own financial health while funding businesses that meet people's needs.

This is not only a healthy greed for yourself, but also for others.

That is the real definition of the healthy side of greed. Everything else is destructive framing.

Only the spiritual liberation from it makes you really free. By extended definition.
I
@BM Cashflow Detective the dictionary, and of you subscribe to its content - the Bible
Edward J. Roche profile picture
Great company, great product. Critics are dead wrong about all aspects of life on earth. The so called whistle blower is a total sham.
I
@Edward J. Roche its product is you.
A
@Edward J. Roche What I wonder about is why she worked at so many social media companies. What's her problem?
A
@AlieGee
I found her to be an idealist who does not understand that the first job of every company, especially publicly traded companies, is to improve share price. And if the company is doing something wrong, the free market will decide that the share price should drop.

She wants FB to be something other than a publicly traded company trying to make money for its investors. I don’t know what she thought she would do at FB but she was crazy to work there.

As though all of us did not already know what FB does and we don’t even work there.
Edward J. Roche profile picture
Agree. FB critics are dead wrong on all points.

Stock is a BUY here.
Jonathan Weber profile picture
@Edward J. Roche Thanks, we agree that shares are attractively priced
F
I’m just about done with FB and that POS Zuckerberg. So many stocks out there I don’t need to support this child. He has zero sense of any ethics. I’ll be selling all my shares
Jonathan Weber profile picture
@FLMike Thanks for your perspective!
Reading is never enough profile picture
@FLMike I believe the opposite.he is a very very ethical person.
F
@Reading is never enough 😳😂😳😂😳😂😂😂😂
M
If you listened to that testimony yesterday you might think otherwise about how this company is run. I get it, it’s been hugely profitable for investors over the past 15+ years but at what cost to our society? 1/2 the country is ready to declare civil war on the other 1/2 and our kids haven fallen prey to this black box that was originally created by zuckerberg so he could rate the girls at Harvard from his dorm room.
Edward J. Roche profile picture
@Moomoo22u2 FB is a tremendous BENEFIT to our society. The critics would ban all thought that disagrees with their own. The critics are evil.
I
@Edward J. Roche tell the families of the dead in Myanmar, or India, or Somalia that FB is a benefit.
Z
@Edward J. Roche it seems your talking about FB which bans speech not aligned with its leftist woke orthodoxy on Covid shutdowns, vaccine mandates, Hunter Biden laptop, southern border crisis, and identity socialism.
I
“I saw a short path to success and I took it. I sold my soul.”

How about be virtuous when others are being harmed? The only way evil men triumph is when good men do nothing. Buying FB is not doing something, selling it is.
Jonathan Weber profile picture
@InvestinBBB what do you do by selling?
I
@Jonathan Weber you drive down the price and send the message that the company needs to change itself. Read the New York Times article from Oct 2018 about Myanmar and FB. Tells you all you need to know.
Edward J. Roche profile picture
@InvestinBBB Dead wrong. It is the critics who are evil. They do not believe in freedom of speech.
dsansing profile picture
Morningstar maintaining their $407 fair value estimate for Facebook.
Jonathan Weber profile picture
@dsansing seems reasonable I think! All the best
Tony Montana Munich profile picture
Thanks for the article.

FB is a buy. I am long FB since 4 years now…
w
@Tony Montana Munich long for a while as well:

FB should be worth $650, today. Its massively undervalued.

FB connects more people than it divides.

FB is is crucialsfor SMBs around the world.

Those that are awful in real life social situations tend to be those who are awful on FB and complaining about it.

Dems want to use it to censor. GOP is upset many have been censored. Their will be no resolution, other than the status que.

The other platforms are even worse for kids, its just that boomers+(congress) are not using them. Seen all the porn stars on Snap lately? Seen how Twitter consolidates voice into a few very loud influencers???- which is far worse than FB......
Buyandhold 2012 profile picture
Facebook is a BUY.
Jonathan Weber profile picture
@Buyandhold 2012 we agree! Happy investing!
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