Facebook Stock Analysis (NASDAQ:FB)
Facebook Analysis Video
Our Facebook stock analysis covers the fundamental, valuation and peer analysis of the stock. The company which made Mark Zuckerberg the second youngest self-made billionaire went public on May 18, 2012. In our Facebook stock analysis, we cover financial details and other important events affecting this online social media and social networking service giant.
Facebook Inc Stock Rating (4.2/5)
Should you buy FB stock?
- The Year Over Year (YoY) revenue growth for Facebook was 50.8% in 2016 Q4.
- Revenue growth has been tremendous with a compounded annual growth of 49.4% over the last 5 years.
- Facebook's average operating margin of 45% was exceptional.
- LTM Net margins were good at 34.4% for Facebook.
- The company has an operating cash flow which is 1.8 times the net income. We see this as a positive signal.
- Facebook generates a high return on invested capital of 31%.
- Return On Equity (ROE) which is a measure of the company's profitability, looks great for Facebook at 18.6%.
- The company has a good Free Cash Flow (FCF) margin of 57.7%.
Should you sell FB stock?
- Trading at a PE ratio of 39.3, FB stock is overvalued in comparison to industry average multiple of 25.8.
- The company is trading at a price to sales multiple of 14.1, which is higher in comparison to the Internet Services industry average of 2.5, making FB stock expensive.
While doing a Facebook stock price analysis one needs to take a look at the various factors affecting the stock price. The company had a market cap of $104 billion at the time of its IPO, and went on to become one of the biggest internet IPO’s of its time by raising $16 billion. However the public offering turned out to be a disaster with various problems like Nasdaq glitches, insiders dumping stocks which accounted for 57% of the shares being sold, the lead underwriters hiking the price to $38, to name a few. Though profitable, the company did not have a clear mobile strategy at the time. The company has been posting impressive numbers Facebook revenue figures. We are more optimistic about our Facebook stock analysis especially when compared with other social sites like Twitter. Also, if one sees Facebook stock price history or for that matter Facebook PE ratio chart, one sees that the company has enjoyed premium valuations.
Facebook market analysis reveals that it is the most prominent social networking website in most of the English speaking countries like the US, Canada and UK.Some of Facebook’s main competitors include Google+, owned by Google (GOOG), LinkedIn (LNKD), Twitter (TWTR), Yelp (YELP), Groupon (GRPN), and Tumblr. It also competes with companies such as Pinterest, Snapchat, Flickr, and Myspace. Facebook owns a significant chunk of the mobile advertising market, and its share is expected to grow in the coming years at the expense of competitors like Google, according to many analysts. That’s got to sting for Google, which runs the world’s most popular mobile operating system and owns seven products with a billion users each. Facebook assets account for $21.65 billion as of 2015.