FB - Embedded Expectations Analysis - 2018 02 27
− Facebook, Inc. (FB:USA) currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 27.5x 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 2017 performance, Value Optimization, and aggressive investments in key areas− Specifically, management is confident that 2017 was a good year in many ways, and that Facebook should not assess by themselves which news sources are trustworthy. Additionally, they are confident in the early results of Value Optimization, and in their progress towards fighting discrimination by disabling the option that lets advertisers exclude people in specific, multicultural affinity segments. Furthermore, they are confident in their aggressive investments in key areas, such as content and their long-term innovation efforts. 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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