FB - Embedded Expectations Analysis - 2020 01 03
Facebook, Inc. (FB:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with an 18.2x Uniform P/E. At these levels, markets are pricing in extremely bearish expectations for the firm. However, management is confident about their revenue growth, employees, and investments, suggesting market expectations are likely too bearish.Specifically, management is confident they have significantly grown their employee base and that community metrics continue to grow. Furthermore, they are confident they continue to invest heavily in AI, and they are confident mobile ad revenue across the Facebook and Instagram apps continue growing.
Considering management's confidence about their revenue growth, employees, and investments coupled with other business tailwinds, current market expectations appear too bearish. As such, long-term outperformance is likely warranted for FB.
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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