FB - Embedded Expectations Analysis - 2018 05 01
Facebook, Inc. (FB:USA) currently trades above historical averages relative toUAFRS-based (Uniform) Earnings, with a 21.2x Uniform P/E. However, even at these levels, markets are pricing in extremely bearish expectations for the firm, which appears unwarranted, given management's confidence in their advertising, growth, and innovation
Specifically, management generated an excitement marker when saying that their new ads model ensures that people see more useful ads. Additionally, they are confident in the solid growth of their community and business in Q1, and that full year total expenses will grow as a result of their long-term innovation efforts. Furthermore, they are confident that their focus on connections over consumption is the right thing for the community in the long run, and that protecting people's information and advertising are not mutually exclusive. This confidence, combined with continued fundamental momentum, suggests FB will likely continue to outperform bearish market expectations, which would support longer-term upside
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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