I can't imagine another brand as well known as Facebook throughout the world, with the possible exception of maybe Coca-Cola. I also can't imagine a company more dominant than Facebook with the possible exception of Amazon. Practically everyone in the world uses Facebook, Instagram, WhatsApp or Messenger, so to write an article on Facebook is rather presumptuous and almost a waste of time. But here it goes because Facebook is far from over. In fact it may just be getting started.
Facebook, Inc. provides various products to connect and share through mobile devices, personal computers, and other surfaces worldwide. Its solutions include Facebook Website and mobile application that enables people to connect, share, discover, and communicate each other on mobile devices and personal computers; Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application to communicate with people and businesses across platforms and devices; and WhatsApp Messenger, a mobile messaging application. The company also offers Oculus virtual reality technology and content platform, which allow people to enter an immersive and interactive environment to play games, consume content, and connect with others. As of December 31, 2016, it had approximately 1.23 billion daily active users. Facebook, Inc. was founded in 2004 and is headquartered in Menlo Park, California.
(Summary) (Company) (Chart)
| 22 February 2017 Price $136.12 1yr Target $159.72 Analysts 43 Dividend --- Payout Ratio --- 1yr Cap Gain 17.33% Yield --- 1yr Tot Return 17.33% P/E 39.18 PEG 1.67 Beta 0.69 | EPS (ttm) $3.47 EPS next yr $6.69 Forward P/E 20.34 EPS next 5yr 23.50% 1yr Price Support $157.21 Market Cap $394.30 Bil Revenues $27.64 Bil Earnings $10.19 Bil Profit Margin 36.86% Quick Ratio 12.00 Current Ratio 12.00 Debt/Equity 0.00 | 1yr RevGR 54.16% 3yr RevGR 51.13% 4yr RevGR 52.65% 1yr EarnGR 170.54% 3yr EarnGR 78.78% 4yr EarnGR 332.22% 1yr DivGR --- 3yr DivGR --- 5yr DivGR --- ROA 17.50% ROE 19.30% |
Business Operations
Facebook's overall mission is to give the world the power to share their lives and make the world more open and connected.
The company's top priority is to build useful and engaging products that enable people to connect and share through mobile devices and personal computers. They also help people discover and learn about what is going on in the world around them, enable people to share their opinions, ideas, photos and videos, and other activities with audiences ranging from their closest friends to the public at large, and stay connected everywhere by accessing our products, including:
- Facebook. Facebook is a mobile application and website that enables people to connect, share, discover, and communicate with each other on mobile devices and personal computers. The company had 1.04 billion daily active users (DAUs) on average in December 2015, an increase of 17% compared to December 2014. They had 934 million DAUs who accessed Facebook from a mobile device on average in December 2015, an increase of 25% compared to December 2014. There are a number of different ways to engage with people on Facebook, the most important of which is News Feed which displays an algorithmically-ranked series of stories and advertisements individualized for each person.
- Instagram. Instagram is a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends.
- Messenger. Messenger is a messaging application available for mobile and web on a variety of platforms and devices. Messenger enables people to reach others instantly and simply, and also enables businesses to engage with customers seamlessly and securely.
- WhatsApp. WhatsApp Messenger is a fast, simple and reliable mobile messaging application that is used by people around the world and is available on a variety of mobile platforms.
- Oculus. The Oculus virtual reality technology and content platform power products that allow people to enter a completely immersive and interactive environment to play games, consume content, and connect with others.
Competition
Facebook's business is characterized by innovation, rapid change, and disruptive technologies. The company faces significant competition in every aspect of their business, including from companies that provide tools to facilitate communications and the sharing of information, companies that enable marketers to display advertising, and companies that provide development platforms for application developers. Facebook competes to attract, engage, and retain people who use their products, to attract and retain marketers, and to attract and retain developers to build compelling mobile and web applications that integrate with the company's products.
Facebook competes with the following:
As Facebook introduces or acquires new products, as the company's existing products evolve, or as other companies introduce new products and services, Facebook may become subject to additional competition.
Facebook's business is characterized by innovation, rapid change, and disruptive technologies. The company faces significant competition in every aspect of their business, including from companies that provide tools to facilitate communications and the sharing of information, companies that enable marketers to display advertising, and companies that provide development platforms for application developers. Facebook competes to attract, engage, and retain people who use their products, to attract and retain marketers, and to attract and retain developers to build compelling mobile and web applications that integrate with the company's products.
Facebook competes with the following:
- Companies that offer products that replicate the full range of capabilities we provide. For example, Google has integrated social functionality into a number of its products, including search and Android, as well as other, largely regional, social networks that have strong positions in particular countries.
- Companies that develop applications, particularly mobile applications, that provide social or other communications functionality, such as messaging, photo- and video-sharing, and micro-blogging.
- Companies that provide web- and mobile-based information and entertainment products and services that are designed to engage people and capture time spent on mobile devices and online.
- Traditional, online, and mobile businesses that provide media for marketers to reach their audiences and/or develop tools and systems for managing and optimizing advertising campaigns.
As Facebook introduces or acquires new products, as the company's existing products evolve, or as other companies introduce new products and services, Facebook may become subject to additional competition.
Technology
Facebook's product development philosophy is centered on continuous innovation in creating and improving products that are social by design, which means that the products are designed to place people and their social interactions at the core of the product experience. As the company's user base grows and the level of engagement from the people who use their products continues to increase, including on mobile devices, the company's computing needs continue to expand. Facebook makes significant investments in technology both to improve their existing products and services and to develop new ones, as well as for the company's marketers and developers.
Facebook is also investing in a number of longer-term initiatives, such as connectivity efforts, artificial intelligence research, and virtual reality, to develop technologies that they believe will help the company better serve their communities and pursue their mission to make the world more open and connected.
Sales and Operations
The majority of the company's marketers use Facebook's self-service ad platform to establish accounts and to launch and manage their advertising campaigns. The company also has a global sales force that's focused on attracting and retaining marketers and providing support to them throughout the stages of the advertising campaign cycle from pre-purchase decision-making to real-time optimizations to post-campaign analytics. Facebook works directly with marketers, through traditional advertising agencies, and with an ecosystem of specialized agencies and partners. They currently operate five support offices and more than 35 sales offices around the globe.
Facebook owns and leases data centers in various locations throughout the United States, and also owns a data center facility in Sweden.
Marketing
The company's communities have grown organically with people inviting their friends to connect with them, supported by internal efforts to stimulate awareness and interest. In addition, Facebook has invested and will continue to invest in marketing products and services to build their brand, grow their user base, and increase engagement around the world. The company leverages the utility of their products and social distribution channels as their most effective marketing tools.
Intellectual Property
To establish and protect the company's proprietary rights, Facebook relies on a combination of patents, patent applications, trademarks, copyrights, trade secrets, including know-how, license agreements, confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual rights. In addition, to further protect our proprietary rights, from time to time the company has purchased patents and patent applications from third parties.
Facebook's product development philosophy is centered on continuous innovation in creating and improving products that are social by design, which means that the products are designed to place people and their social interactions at the core of the product experience. As the company's user base grows and the level of engagement from the people who use their products continues to increase, including on mobile devices, the company's computing needs continue to expand. Facebook makes significant investments in technology both to improve their existing products and services and to develop new ones, as well as for the company's marketers and developers.
Facebook is also investing in a number of longer-term initiatives, such as connectivity efforts, artificial intelligence research, and virtual reality, to develop technologies that they believe will help the company better serve their communities and pursue their mission to make the world more open and connected.
Sales and Operations
The majority of the company's marketers use Facebook's self-service ad platform to establish accounts and to launch and manage their advertising campaigns. The company also has a global sales force that's focused on attracting and retaining marketers and providing support to them throughout the stages of the advertising campaign cycle from pre-purchase decision-making to real-time optimizations to post-campaign analytics. Facebook works directly with marketers, through traditional advertising agencies, and with an ecosystem of specialized agencies and partners. They currently operate five support offices and more than 35 sales offices around the globe.
Facebook owns and leases data centers in various locations throughout the United States, and also owns a data center facility in Sweden.
Marketing
The company's communities have grown organically with people inviting their friends to connect with them, supported by internal efforts to stimulate awareness and interest. In addition, Facebook has invested and will continue to invest in marketing products and services to build their brand, grow their user base, and increase engagement around the world. The company leverages the utility of their products and social distribution channels as their most effective marketing tools.
Intellectual Property
To establish and protect the company's proprietary rights, Facebook relies on a combination of patents, patent applications, trademarks, copyrights, trade secrets, including know-how, license agreements, confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual rights. In addition, to further protect our proprietary rights, from time to time the company has purchased patents and patent applications from third parties.
My Path Forward
Recently Facebook announced that they had developed a SnapChat like feature that they're going to add to the WhatsApp application in direct competition with SnapChat. They're also announcing that they're going to stream a Major League Baseball game of the week this summer in direct competition with Twitter which streamed NFL and College Football games last fall. And I think they'll be successful.
All this just puts more eyeballs on their site for longer periods of times. This will provide Facebook the ability to subject it's customers with additional advertisements creating additional revenue for Facebook and its shareholders.
I feel that Facebook is a juggernaut in the social network space and it's so entrenched now with its billions of viewers that I believe it's not unstoppable. So not owning it is really not an option for me at this time. In actuality I've been in an out of this stock and looking back I probably should have just stayed in the stock. With support around $120 per share, the current price of $136 is a little bit of a reach for me. I'd rather buy these shares below $130. At that price, the stock would produce an estimated 20% total return on my investment. And that's a nice return.
Recently Facebook announced that they had developed a SnapChat like feature that they're going to add to the WhatsApp application in direct competition with SnapChat. They're also announcing that they're going to stream a Major League Baseball game of the week this summer in direct competition with Twitter which streamed NFL and College Football games last fall. And I think they'll be successful.
All this just puts more eyeballs on their site for longer periods of times. This will provide Facebook the ability to subject it's customers with additional advertisements creating additional revenue for Facebook and its shareholders.
I feel that Facebook is a juggernaut in the social network space and it's so entrenched now with its billions of viewers that I believe it's not unstoppable. So not owning it is really not an option for me at this time. In actuality I've been in an out of this stock and looking back I probably should have just stayed in the stock. With support around $120 per share, the current price of $136 is a little bit of a reach for me. I'd rather buy these shares below $130. At that price, the stock would produce an estimated 20% total return on my investment. And that's a nice return.
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