Facebook Stock Review

In this article, let’s talk about Facebook (FB) stock. I’ll try to be honest in my opinions and take a look at the numbers to back things up.

Before we begin, here are some quick stock statistics on FB, with Facebook trading on the NASDAQ stock exchange under the ticker symbol FB. At the time of writing, it is trading just above US$302 per share with a P/E ratio of 36.99.

The founder, chairman and CEO of Facebook is Mr. Mark Zuckerberg. He still monopolizes the company and holds the maximum authority and weight in business decisions and voting power.

Mark Zuckerberg owns or controls 88.1% of Facebook’s Class B shares, which each have 10 votes at the annual meeting, or 3.98 billion votes in total.

There are only 2.4 billion Class A shares, which are the only stocks that investors like you and me can buy. This is the kind of control and power Mr. Zuckerberg wields over social media giant Facebook. It’s scary yes, but that’s how it is.

FB has acquired 82 companies to date. Major and notable acquisitions include WhatsApp, Instagram and Oculus (VR).

You can see the complete list of FB acquisitions till date by visiting this link – https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Facebook

Facebook Stock does not pay any dividends and has not paid a cent in dividends to date. This means Facebook is a growth technology stock. Of course, it’s a safe bet with the market capitalization it has.

Facebook Actions – Fundamentals

In this section of the article, let’s take a quick look at the fundamentals of FB stock.

1. Current stock price: $302

2. Current P/E: 36.99

3. Market capitalization: 861B

4. Stock’s 52-week range: $137 – $304

5. Average volume: 25 million per day

6. Forward P/E: 28.41

7. PEG ratio (5 years expected): 1.10

8. Price/Sales (ttm): 11.58

Facebook Stock – Price, Revenue and Profit

Before we begin, I want you to take a look at the FB stock chart for the last 5 years.

That’s great stock growth, right? Yes it is. Impressive.

Now, look at the chart below to see the annual returns generated by FB stock:

This is the annual return of Facebook stock since it began trading live. (or creation)

As you can see, there is only one year where the stock came back negative or in the red, that too considering the start and end price, otherwise I don’t think it would be negative.

Facebook’s growth story in terms of revenue generation and monetization of its platform has always been impressive to Wall Street, even if it has slowed late. Stock market returns so far have been excellent, to say the least!

But the growth momentum appears to be accelerating quite quickly, in percentage terms.

Facebook revenue

Below is Facebook’s revenue over the past 10 years:

Although there is an exponential increase in trailing 12 month revenue and quarterly revenue, what really gets interesting is the third chart.

Just look at the quarterly year-over-year growth chart, it has been steadily declining since 2014. In 2020 it is almost dead.

This simply means saying or predicting that Facebook is no longer growing at the same rate as in 2012 and before.

Possible reasons may be lack of diversification or product-related revenue. Additionally, the platform is not popular with the general public due to scandals and data issues.

Remember what we talked about about companies like Apple or Microsoft?

Now these companies have healthy recurring revenues in terms of services or products. Their product diversification is greater and therefore the income generated. Recurring revenue is still like gold. This keeps adding to the toll.

Whereas with Facebook, 99% or almost all of its revenue comes from digital advertising. This is exactly why I’m a bit skeptical and hesitant to recommend the title to the general public.

Make no mistake, FB is a monopoly in its space (social media), but it’s just not diverse enough like Apple, Microsoft, or even Amazon. The business model still lacks cream, in my opinion. It’s just half-baked with a lot of problems.

Facebook’s last quarter revenue

Now let’s take a quick look at Facebook’s recent quarterly results.

View the Revenue vs. Earnings Report for Facebook Stock: (Quarterly)

Revenue vs. Profit: Facebook Stock (Annual)

Facebook Stock: Total ESG Risk Score and Actual Data vs. Estimates Based on Analyst Target

Quick comparisons

In this section, let’s quickly compare the market returns of a few FAANG companies and stocks:

1. Facebook vs. Apple

2. Facebook vs. Google (Alphabet)

3. Facebook vs. Microsoft

Conclusion

Although Facebook is one of the best stocks in the US market with amazing results in the past, I am personally not a big fan of this stock.

First, the company is not very diversified, whether it is Instagram or WhatsApp (yet to be monetized).

Second, Facebook relies primarily on digital advertising revenue to supplement its bottom line.

Third, the company is no longer popular with the masses and is still struggling for the wrong reasons.

I would definitely choose Apple, Microsoft, or Amazon over Facebook stock any day.

Thanks for reading and let me know your comments below.

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