Facebook (FB) and Alphabet (GOOGL) are both among the top tech companies in the world along with Apple, Amazon, Microsoft, etc. The majority of the “billions” generated by these two tech giants come from online digital advertising. While Alphabet is #1 in ad revenue, Facebook is #2 with around $50 billion in ad revenue each year.
These two stocks are listed on the NASDAQ, Facebook negotiates with the FB symbol while for Alphabet it is GOOGL Class A and Class C. Class A stock is the parent and largest company.
Google is a subsidiary of parent company Alphabet while Facebook owns Instagram, WhatsApp and Messenger (in-house product)
In this article, I will not go through Facebook and Alphabet – products, services, sources of income, etc. Instead, the sole purpose of my article is to compare the two stocks with the raw data available. No technical charts, futures, nothing forecasting. Simple comparison with the market and the performance of these stocks over time.
In this article, all I plan to do is compare the two stocks and let you know the results for the money invested. Let’s get started.
Facebook Vs. Alphabetical letters
First of all, when you look at the quarterly or annual reports (Investor Relations section) of Facebook and Alphabet stocks, you may notice several things:
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These two companies earn the majority of their revenue from online digital advertising. (more than 70% of turnover)
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While Facebook is the market leader in social media applications, Alphabet’s Google has been the #1 search engine for over a decade and still continues in this field without any competition.
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Mark Zuckerberg is the man behind Facebook, while for Google it is Sundar Pichai as CEO.
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Aside from online advertising, there isn’t much to say about these companies, their revenue streams aren’t as exciting as maybe Apple’s or Microsoft’s to be frank.
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While for Facebook, the important metrics are increasing in terms of DAU, revenue per user in NA territory. For Google, the Pixel product line is intermittent, but their ad revenue is a beast.
There you go, this list wasn’t complete, but a few high liners I could think of.
You all know Facebook and Google, we use their services all day long so let’s stop there. The purpose of this article is not that.
Let’s actually start with the stock comparison and returns 🙂
Facebook Vs. Alphabet: market capitalization and quick statistics
Before we proceed to compare stocks, let’s look at the fundamentals of the stocks:
Facebook is inferior to Alphabet in terms of market capital; Alphabet or GOOGL are ahead and almost close to the trillion-dollar market capitalization they are expected to achieve by the end of the year.
Facebook stock is better than Alphabet in terms of P/E ratio.
Take a look at that dividend yield, it’s disappointing 🙂
These two stocks offer no dividend. They are growth beasts, however.
Stock returns
And I come back to my favorite section.
Today’s participants – Facebook and Alphabet actions 🙂
Alright, let the rounds begin.
Knockout 1: returns since the start of the year (Year-to-date reports)
I know 2020 is a disaster, with COVID-19 and millions of job losses. But does this affect these powerful blue chips? Of course, this is the case in product sales.
We’ve seen a huge drop in stock prices, especially Facebook and Alphabet, right? Since then, the market has recovered almost to where it was in February. But are we there yet?
Watch below for yourself:
Since the start of 2020, with the whole COVID-19 pandemic and the market crash, Facebook has returned a staggering 9.54% to date and with Alphabet it is achieving a return of 3.78%.
When you compare these returns with Microsoft’s or Apple’s double-digit returns for year-to-date stock returns, this is very low. This is only because they are more diversified product companies than Google and Facebook, which rely solely on digital advertising for revenue.
Let’s move on.
Knockout Stage 2:
Facebook Vs. Alphabet – Return 6 months
Over the last 6 months, here is the performance of Facebook and Alphabet stocks:
Facebook (FB): 15.22%
Alphabet (GOOGLE Class A): 4.22%
In the case of Facebook (FB), the YTD and 6-month stock returns are good and in the double digits. While for Google it’s really bad and with low single digit returns for both year-to-date and 6-month charts.
Third knockout round:
Facebook Vs. Alphabet Action – Returns over 1 year
Alphabet clearly dominates round 3.
Look at the returns on the chart.
Results of the third round:
Alphabet (GOOGL) stock returns over the past year: 29.16%
Facebook (FB) stock returns over the past year: 20.94%
Let me be clear, this doesn’t mean Facebook stock is weaker than Alphabet. Wait until we get there and see why Facebook ultimately wins! Patience is the key here 🙂
So for round 3, Alphabet dominates and wins! Well done Google 🙂
Knockout Round 4:
Facebook Vs. Alphabet: returns over 5 years
This is where things start to get a little more interesting! We look at more stable stock returns over 5 years.
Over the past 5 years,
Facebook and Alphabet stocks are on par with market returns at 150%.
So, at the end of the fourth round, we still don’t know who the real winner is. These two stocks are pretty much evenly matched so far.
Knockout Stage 5:
Let’s wrap it up with the maximum time frame for stock returns. I mean the investment returns since these two companies first started trading.
Screenshot below:
Are you ready, people?
Since creation:
Facebook stock has returned 159.72% year to date.
While for Alphabet (Google) it is 155.47% to date.
The ultimate winner here is Facebook, based on available market data and facts.
Blue chip growth stocks vs. Dividend Stocks
If you are a young Canadian in your early 20s or 30s and you are just starting out, I sincerely urge you to invest in blue-chip companies.
It’s not Apple or Microsoft, or any of the big companies – American or Canadian.
Some of them. the best evergreen safe bets are: Facebook, Coca Cola, Nike, Nvidia, Amazon, Apple, Microsoft, RBC, CIBC Alphabet and the list goes on.
These are all huge blue-chip companies with an absolute beast in terms of earnings potential. They can withstand market declines and rise again over time.
Plus, these blue-chip stocks will easily beat your S&P 500 index funds, NASDAQ Top 100 index funds, or any other stock you can name. They are the ones who determine the market in terms of index weighting.
So what about dividend-only stocks?
Dividend stocks are good, there’s no doubt about that, for example, take Enbridge.
Enbridge (ENB) is a great stock with a quarterly dividend of over 7% and decent EPS growth of 15% on an annual basis over the last 5 years.
Let’s say you invest $10,000 today in ENB stock.
Over the next five years, these dividends could reach $15,000 in your TFSA or RRSP accounts. Is that all you want? Oh yes, ENB increases its dividends every year.
Ok, forget about ENB for a moment.
Take RBC, CIBC, BNS, Shopify, Dollarama, ZSP, VFV, VCN, XRE, XUS, XIC – can any of these stocks or the best of ETFs match the returns of Apple or Microsoft?
I bet they can’t.
So why be conservative?
What is the point you want to make?
What’s wrong with being aggressive when you have all the time in the world?
So, is something wrong with ETFs?
Absolutely not!
Personally, I also own ETFs. But I like growth stocks more.
This is where the majority of my money goes.
ETFs are good, they help you diversify. But that’s not all. GICs and bonds are also good. It all depends on what you want and the age allocation percentage.
The real problem with ETFs is that they hold hundreds or even thousands of stocks and track the entire index.
Even if you consider the best of the best S&P 500 index funds, including Canadian hedge funds, you’re still talking about a 15% return per year (max).
Instead, invest in Microsoft or Apple stocks, I’m sure it will be more. It’s like all your money is growing with the best in class rather than the entire class where someone fails and your growth is hindered for the moment. Additionally, too many eggs in the basket (ETF) will spoil the entire basket. Can we focus on 100 students at the same time? Is this even possible? We have our favorites in everything, so why not stocks? Why take a conservative approach and wait for feedback?
Last but not least, Canadian bonds are also good, as are mutual funds and TD e-series. It all depends on what your goals are.
All I can say is make your investment count and invest in good growing companies for the long term.
Facebook Vs. Alphabet stock: Conclusion
In this article, I have taken a general approach to educate beginners/investors about the importance of investing in stocks of Bluechip companies such as Facebook or Alphabet. I just took the fun side by using the terms KO like in Boxing rounds 🙂
Compared to Facebook and Alphabet stocks, Microsoft or Apple are significantly better in terms of overall long-term market returns.
Please don’t time the markets when investing in blue chip stocks and don’t expect heavy dividends here. If you need great dividend stocks, go for REITs like RioCan, ENB, Fortis, etc. or XRE ETF (pool of REITs in one location with more diversified REITs and one location)
When it comes to blue chips, they are massive growth stocks that can withstand any stock market crash. Market falls are always temporary and rebounding will be difficult.
You just need to invest and relax, forget about the investment for a few years. See for yourself the magic of composition.
That’s all for now, I hope you liked and enjoyed the content. Please let me know your thoughts and comments below 🙂 Also share the content and help spread the word.
