FB - Embedded Expectations Analysis - 2018 07 31
Facebook, Inc. (FB:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with a 25.6x Uniform P/E. At these levels, markets are pricing in extremely bearish expectations for the firm, which appears unwarranted, given management's confidence in Instagram actives growth, improved content management, increased use of Stories and continued strength in direct ads salesMeanwhile, management is confident in the active user rates in Europe despite the GPDR implementation, which management believes may actually result in more relevant ads for those consumers. Additionally, management is confident in Instagram's continued success and active user growth, particularly with the Story feature that will create new ad revenue streams as companies adjust to creating content for that platform. Finally, management is confident in their improving content management abilities, particularly with moderating graphic violence content through their AI tools
Facebook is building and engaging products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and in-home devices. The company's products include: Facebook, which enables people to connect, share, discover, and communicate with each other on mobile devices and personal computers; Instagram, which is a place where people can express themselves through photos, videos, and private messaging, and explore their interests in businesses, creators and communities; Messenger and WhatsApp, which are messaging applications; and Oculus, which connects people through its Oculus virtual reality products.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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