SNAP

24 in a Row! Order the Exclusive Today!

by

Image Source: An excerpt from the March 2020 edition of the Exclusive publication. Valuentum offers commentary across the capital stack in the Exclusive publication. In the Exclusive publication, Valuentum highlights three new ideas each month to consider, one for income, one for capital appreciation, and a “short” idea consideration (all three outside our existing coverage universe). Fresh, underfollowed and new ideas — outside our coverage universe — every month! Nothing is held back.  Big Winners Backed by In-Depth Theses Since the monthly Exclusive was first published in July 2016, Valuentum’s mission with the publication has been to produce an unmatched newsletter that delivers ideas with high success rates and ones backed by in-depth theses across the three key themes: income, … Read more

Debt-Free Facebook’s Free Cash Flow Surges 38%, Adds to Buybacks

by

Image Source: Facebook Q4 2019 slides. Revenue growth at Facebook remains solid, if not impressive. By Brian Nelson, CFA On January 29, Facebook (FB) reported better-than-expected fourth-quarter 2019 results. In the quarter ending December 31, total revenue advanced 25%, but total costs and expenses leapt 34%, translating to operating-income expansion of just 13%. This was better than the full-year number, which showed operating income fall 4% as costs ballooned. We don’t think the market liked the full-year numbers which were weighed down by a weak first half of the year. The fourth quarter, itself, was solid, and Facebook continues to plow ahead. Image Source: Facebook Q4 2019 slides. The company’s operating margin has bounced back significantly. While we expect the … Read more

Facebook to Test New Ad Feature

by

Image Shown: Facebook’s share price performance since late 2017. Shares may be poised to breakout of a recent downtrend. Source: TradingView.com Facebook has faced significant pressure from a number of sources in recent months, but we continue to like the stock, which may be poised for a technical breakout and appears undervalued. By Kris Rosemann It’s no secret that simulated Best Ideas Newsletter portfolio idea Facebook (FB) has been working to right the ship while under an intense level of scrutiny from a variety of sources. The company has been caught in perhaps an unprecedented culmination of social and political pressures, but these are unprecedented times. We continue to like shares of Facebook due to the robust free cash flow … Read more

In the News: Musk, Facebook, and GameStop

by

We’re not sure that Tesla has things figured out. Social media entities, including one of our favorites Facebook, have fallen on hard times given negative sentiment. GameStop could sell itself for a significantly higher price than what the market is currently willing to exchange shares. By Brian Nelson, CFA Let’s get one thing straight: we have a tremendous amount of respect for Elon Musk. He is a tremendously successful person and entrepreneur, but some of the things he has done during the past few months have been puzzling. We think we might be able to understand some of the pressures involved in running a business and trying to satisfy a growing list of customers (and skeptics), but what makes Elon … Read more

Facebook: $236 Fair Value Estimate, Now Rated 6 on the Valuentum Buying Index

by

Image Source: Facebook’s second-quarter slide presentation We were blindsided by Facebook’s outlook, and so was the market. Nobody feels worse about the Facebook idea than we do. Not only was Facebook a top weighting on the Valuentum Buying Index, but it also grew to a rather large position in the simulated Best Ideas Newsletter portfolio. We added Facebook to the simulated Best Ideas Newsletter portfolio at $112.10 in January 2016, and a good portion of its outsize returns have been eroded since its peak at ~$220. We still like shares, but for the company to return to top-rated status, the market would have to get behind it in the form of an advancing stock price. By Brian Nelson, CFA We … Read more

Twitter Working Backwards?

by

Image Source: Xiaobin Liu The social media platform known for its tweets faced selling pressure after reports surfaced that it had removed 70 million fake accounts from its website. Social media is still a relatively young technology, and our top idea in the space remains the cash-rich Facebook. By Kris Rosemann Shares of Twitter (TWTR) fell more than 5% during the trading session July 9, less severe than the drop had been at its session worst, following a report from The Washington Post outlining the company’s suspension of 70 million fake or spam accounts in the months of May and June. Twitter had 336 million monthly active users as of the end of the first quarter of 2018, but company officials … Read more

Twitter’s Problems: Slow Growth in the US and Low-ROI for Small Business

by

Image Source: Xiaobin Lui We like Twitter’s improved free cash flow generation and net cash position on the balance sheet, but it’s too hard for small businesses to build customer trust on the platform, and the lack of engagement from followers at mom-and-pop businesses is almost hard to believe. It seems like Twitter remains primarily a distribution platform for politicians, the media and celebrities, those already having exposure from other avenues. Small, mom-and-pop businesses – the bread and butter behind future advertising revenue at Twitter – can’t make Twitter work for them as returns on their investment remain minimal, at best. By Brian Nelson, CFA We had warmed up to Twitter (TWTR) in February because we thought the platform may … Read more

Value Investors Starting to Salivate Over Facebook’s Fall

by

Image Source: DonkeyHotey Facebook is becoming a value investor’s dream: a stock with fantastic free cash flow generation and balance sheet health dealing with transient headline noise. We’re waiting for shares to start to turn upward before we would consider adding to the hypothetical weighting in the simulated Best Ideas Newsletter portfolio. They look cheap! By Brian Nelson, CFA Facebook’s (FB) fall from grace has been a dream come true for many value investors looking for a company with a pristine balance sheet and tremendous free cash flow generation. By a pristine balance sheet, we mean a huge net cash position (~$41.7 billion) and no debt. By tremendous free cash flow generation, we mean that Facebook hauled in $5.4 billion … Read more

Market Overreacts to Facebook News

by

Image Source: Christopher The headline news seems concerning, but we’re taking a long-term perspective with Facebook. We doubt the news will meaningfully impact the trajectory of growth of its long-term free cash flow, and we’re not reading too much into events that seem heavily-influenced by the overheated political environment. By Brian Nelson, CFA Investors are overreacting and selling shares of Facebook (FB) March 19 because they are worried about implications of a UK probe and a state investigation into the practices of Cambridge Analytica, a privately-held data mining and analysis company, and whether the way Cambridge Analytica acquired and applied data from users of Facebook was legal. The New York Times first broke the story when the paper published a … Read more

Facebook – Still One of Our Favorites

by

Image Source: Facebook Let’s not beat around the bush with this article. Let’s talk about why we like Facebook in layman’s terms. The company is a veritable free-cash-flow generating powerhouse, and its balance sheet is pristine. We value shares at $238 each, and its rating of 7 on the Valuentum Buying Index isn’t bad considering the frothiness of the market. By Brian Nelson, CFA Shake off the idea that technology is riskier than any other sector because it might not be. Don’t worry about the concept of “fake news” tarnishing the Facebook (FB) brand, as that’s just noise. Facebook operates at the heart of society, and while there will inevitably be changes to its platform along the way, literally everyone … Read more