Facebook (FB) Stock Undervalued Now | What You need to Know |

TL;DR

Facebook's stock is undervalued compared to its major competitors, and the company's long-term growth prospects remain strong.

Transcript

Hi everyone, this is Victor here. Welcome to the Intelligent investor channel where you will learn about stock investing and personal finance that will help you become a great investor. In this video, I’m going to talk about Facebook (FB) “Why I believe Facebook (FB) stock is undervalued right now, and why I believe Facebook’s long-term growth pros... Read More

Key Insights

• 📈 Facebook's stock performance has followed a similar trend to its competitor Alphabet, showcasing their dominance in the digital advertising market.
• 🫠 The iOS 14 update and the FTC lawsuit pose significant risks to Facebook's ad revenue and competitive position.
• 🥳 Facebook is undervalued compared to major competitors based on PEG ratio and forward price-to-earnings ratio.
• 😎 The company's long-term growth prospects rely on its daily active users, the shift from offline to online advertising, and the potential success of AR glasses.

Questions & Answers

Q: How has Facebook's stock performance compared to its major competitor, Alphabet?

Over the past 5 years, Facebook's stock has increased by +164.67% compared to Alphabet's increase of +143.62%. In the past 2 years, Facebook increased by +67.53% while Alphabet increased by +56.32%.

Q: Why is Facebook considered undervalued compared to major competitors?

Facebook has a smaller PEG ratio (1.58) compared to Alphabet (1.99), Snapchat (-8.08), and Twitter (3.45). Additionally, Facebook has a lower forward price-to-earnings ratio (23.94) compared to its competitors.

Q: What is Facebook's business model and its main revenue source?

Facebook is the largest social networking company in the world and earns 99% of its total revenue from ads. The company also has other sources of revenue such as Oculus VR headsets and Marketplace.

Q: What are the main risks faced by Facebook currently?

The two main risks for Facebook are the new iOS 14 update that limits ad tracking without users' consent, and the Federal Trade Commission's lawsuit accusing Facebook of monopolistic behaviors and illegal maintenance of a monopoly.

Summary & Key Takeaways

• Facebook's stock performance in the past 5 years has shown similar upward trends as its competitor Alphabet (parent company of Google) due to their dominance in the digital advertising market.

• The two main risks for Facebook currently are the iOS 14 update, limiting ad tracking, and the Federal Trade Commission's lawsuit concerning monopolistic behaviors.

• Facebook is undervalued when compared to competitors in terms of PEG ratio and forward price-to-earnings ratio.