SOCL

Good News for Facebook Ahead of Earnings Report

by

Image Shown: Facebook Inc’s top-line has experienced meaningful growth in recent years. Image Source: Facebook Inc – Fourth Quarter and Full-Year 2019 Earnings IR Presentation By Callum Turcan One of our favorite Best Ideas Newsletter portfolio holdings is Facebook Inc (FB), and we appreciate its pristine balance sheet (plenty of cash on hand and no debt on the books as of the end of 2019), promising growth trajectory (short-term headwinds aside, digital advertising is a secular growth market and likely to bounce back strongly once the pandemic subsides), and we would like to highlight that shares of FB trade at a meaningful discount to our fair value estimate (which sits at $234 per share) as of this writing. Recently, several … Read more

Pinterest Sees Interest in its Social Media Site Grow During COVID-19 Pandemic

by

Image Source: Pinterest Inc – Fourth Quarter of 2019 Earnings IR Presentation By Callum Turcan Social media firm Pinterest Inc (PINS) published an operational and financial update after the market close April 7 that caught a lot of investor’s eyes. Pinterest reported that its user base, measured by monthly active users (‘MAUs’), had continued to grow sequentially in the first quarter of 2020 on both a domestic and international basis. While the ongoing coronavirus (‘COVID-19’) pandemic has likely negatively impacted its digital advertising business, Pinterest is communicating to investors that over the longer term, its social media offering is growing in popularity which supports growth down the road. Financial and Operational Update During the final three months of 2019, Pinterest … Read more

Our Reports on Stocks in the Internet Content & Services Group

by

Image Source: Christopher Structure of the Internet Software & Services Industry The Internet software/services industry is composed of a variety of companies with rapidly-changing business models. Most focus on improving the ways people connect with information, either via Internet search or by social media platforms, and generate revenue primarily by delivering cost-effective online advertising. Constituents earn significant returns on invested capital due to their capital-light operations, though competition remains fierce. We expect most companies in this group to look substantially different 10 years from now than they do today. Overall, we’re neutral on the structure. We’ve optimized our tehnology coverage. To access the reports, please select here.

US Government Launches Anti-Trust War Against Alphabet, Apple, and Facebook

by

Image shown: Technology shares took a beating during the trading session June 3. The DOJ and FTC are coming after Alphabet, Apple and Facebook, and we can’t help but feel the moves are in some ways politically motivated. Even if regulators decide to break up these companies, it doesn’t mean they will “confiscate” their businesses. Worst case scenario, perhaps pieces of their businesses would be auctioned off at arguably above-market prices, which could be a net positive. By Brian Nelson, CFA Nobody seemingly wants big “new” tech to win, and while such a dynamic may counterintuitive turn them into great long-term investments as a result, the stock-price behavior by some of the tech heavyweights, including Alphabet (GOOG, GOOGL) and Facebook … Read more

Facebook Surges! Microsoft, Visa, PayPal Quarterly Reports Solid

by

Facebook did not disappoint after the close April 24. Shares are surging after hours. We continue to value the company at nearly $230 per share. — Facebook Delivers in First Quarter, Sets $3 Billion Dollar Legal Expense — We’ve been pounding the table on Facebook (FB) since adding an additional 3 percentage points of “exposure” to the Best Ideas Newsletter portfolio in the low $160s in July 2017, and we further added to the company in the newsletter portfolio with shares under $140 each near the December 2018 bottom when we went to “fully invested.” As we have said this entire time, the sell off in Facebook last summer has been a gift to long-term investors!  — Facebook’s total revenue advanced 26% on … Read more

Facebook’s Huge New Opportunity in Instagram Checkout, Reiterating Fair Value Estimate ~$230

by

Image Source: Facebook’s Instagram We continue to like Facebook, and we’re huge fans of Instagram Checkout. Many may not know it yet, but Instagram Checkout may mark the beginning of retailers’ websites becoming obsolete. The sell-off last summer in Facebook was a big gift for those that stuck with our thesis. Brian Nelson, CFA I think one of the things that financial advisors and financial planners do extremely well is explain the concept of patience to their clients. Can you imagine if a client cashed out upon every 15%-20% decline? That’d be a recipe for continuous disaster. On the path to the market setting broader market highs in 2018, there have been many disappointments along the way. There have been … 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

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