Facebook posts $3.89Bn profit, up 71%. Would you buy shares in them? If not them, who

wonderwall900

Facebook posts $3.89bn quarterly profit, up 71% from last year

Shares hit record high after figure is much higher than expected, with total revenue climbing 44.8% thanks to increased mobile video ad sales

https://www.theguardian.com/technology/2017/jul/26/facebook-quarterly-profit-revenue-mobile-ads

Their share price has jumped 4% in a few hours.

Do you own shares in any companies like Facebook, Google etc? I think those two, along with Amazon, would be safe enough bets for seeing a decent return in the medium to long term.

Obviously no shares are completely safe, but I think those 3 companies, and maybe Uber too, could have far better growth potential over 20-30 years than something like a pension fund.

Stonerloner

Facebook is dying,get out while you can!

wonderwall900

Stonerloner wrote: »

Facebook is dying,get out while you can!

I havent invested in any of them yet. And while Facebook might not be as popular as a social media platform as it once was, they now have a huge treasure chest to do what they want. Rumours include a Facebook phone, a Facebook streaming service ala Netflix, Facebook Music etc.

The amount of money they have to play with now is probably only rivaled by Apple.

Permabear

This post has been deleted.

Kimbot

Permabear wrote: »

This post had been deleted.

Well you hardly bought the whole company? :P

donegaLroad

green energy, the only way is up (maybe not overnight though)

biko

I have shares in Irish Water, just waiting for them to pick up...

Permabear

This post has been deleted.

wonderwall900

Permabear wrote: »

This post had been deleted.

That was a good move. Without meaning to sound nosy, can you say what other companies you've invested in?

Roger Hassenforder

wonderwall900 wrote: »

That was a good move. Without meaning to sound nosy, can you say what other companies you've invested in?

Bebo
MySpace

Wossack

biko wrote: »

I have shares in Irish Water, just waiting for them to pick up...

https://pbs.twimg.com/media/Bj5G4AACEAAx_m9.jpg

Hector Bellend

I'd invest in pornhub.

wonderwall900

Roger Hassenforder wrote: »

Bebo
MySpace

I've a funny feeling I picked the wrong forum to have even a semi serious discussion on this topic.

Would i buy shares after a big profit jump? Probably not...

valoren

What did it make in a year? $9 billion dollars net profit?
It's valued at $480 billion and made the majority of that 9 billion through advertising. Scary.

The only way they could 'monetise' facebook was through advertising since the IPO.
Ad revenue growth has been steadily climbing since the IPO which took place during the current bull market.
The current price must surely be based on the notion that this revenue growth through advertising will continue.

This is the concern for me...
Mobile ad revenue accounted for 87% of the company’s total advertising revenue of $9.16 billion in the latest quarter, up from 84% a year earlier.

It is the 7th largest company in the world by market cap (not revenue). That's a lot of advertising sales.

What happens during a recession? Facebook, the stock has never traded during a bear market. What will happen during a downturn? One thing for sure is that advertising rates will be cut, driven down. Advertising rates are cyclical, like the price of oil say. What would happen if those rates dropped 50% in a 2008/2009 market environment? What if FB posts a horror earnings quarter? There would be a lot of interested buyers of the stock if it crashed for a period of time.

What you'd like to see as an investor, particularly at an overvalued price of $165 is another income stream. They are pushing towards accepting credit cards for payments now, which they facilitate and get a fee from. That's a potential gold mine in incremental fee's. It is the powerhouse social media site and has 1.5 billion active users. As an investor, it will certainly be interesting to see how they look to expand the revenues. As an investor (and when you hold stock, you own the business) that is what you are interested in.

Permabear

This post has been deleted.

wonderwall900

valoren wrote: »

What happens during a recession?

Im curious, when do you think the next recession will hit? It's supposed to be roughly every 10 years we get a dip isnt it? So we are due one any month now.

RobertKK

This is my post from the Investments and Markets forum, posted earlier this year:

RobertKK wrote: »

Risky but high risk reward.
Esperion is already up 70%+ this year and at $21 it is still way off its highs which were well over $100, it lows were at $9s
The pathway for their cholesterol drug looks clearer.
For the record I bought some at $13s and more in the $18s.
Despite the already huge gains, I believe ESPR still has a long way to go.

Which answers the question.
Currently the shares are just under $50 a share.

wonderwall900

RobertKK wrote: »

This is my post from the Investments and Markets forum, posted earlier this year:



Which answers the question.
Currently the shares are just under $50 a share.

Wouldn't it take just one FDA ruling to not go a drug company's way for their share price to be annihilated though?

RobertKK

wonderwall900 wrote: »

Wouldn't it take just one FDA ruling to not go a drug company's way for their share price to be annihilated though?

It depends on the company and how many products they have, if all in one basket it would be devastating if the FDA ruled against.
ESPR are dependent right now on their cholesterol drug, I think this company will be bought out by big pharma as it has a drug that is an alternative to controversial statins, and has shown good results so far. It is up 325% over the past 6 months.
But nothing is 100% guaranteed...one should only invest what they are prepared to lose.

valoren

wonderwall900 wrote: »

Im curious, when do you think the next recession will hit? It's supposed to be roughly every 10 years we get a dip isnt it? So we are due one any month now.

The common 'consensus' is that the markets are overpriced and a correction rather than a crash is expected. I'd take any market prognostications with a pinch of salt to be honest. The markets are strange animals indeed.

But paying $165 a share for Facebook today is too high a price for me with what it's currently earning, recession, crash or no. I wouldn't expect a fantastic rate of return at that price tbh

Richard Hillman

Uber because they will be behind driverless taxis.

RobertKK

I got an email from Revolut yesterday as they are looking for crowdfunding, they said they got big investors, but they want to give their users a chance to get ownership in the company via your small time equity holding, it will be a limited amount of shares and amounts one can invest are small. Apparently if it ever gets floated on the stock market, one would get shares.
Personally I love Revolut so applied in the hope of being successful in getting some. The company is only 2 years old and already has 700,000 users.

diomed

The Facebook P/E is 41.5 this months.
It will take 41 years to earn enough profit to reach the share value.

With new companies I wonder how they book profits. Do they anticipate revenue and profit on contracts? They can be creative. Remember Enron.

There is always big pressure, external and internal, to meet quarterly targets to please the stock market, and keep the share price and confidence high.

I avoid technology. In new industries like canals, railways, radio, motor, aviation, computers, internet, social media, everyone knows about it.
You are buying projections. These markets always have a lot of losers while they fight for supremacy, and often only a few winners.

I think Yahoo traded at a P/E of 630 when they were the search engine kings. Google arrived.

Every day people wash their faces / hair, brush their teeth, shave, eat, drink beer and will do that in the future. There are dominant companies in those industries. Identify the dominant companies and wait until prices are dirt cheap. Make a list today of the share prices of these solid companies, and write down a ridiculously low price you would like. Have the cash in a stockbroker account and have the courage to buy when it hits that price. For some reason people are afraid to buy when prices are low.

As I type this the Dow Jones (DJIA) is at 21,784. The high for the last nine years is 21,790 achieved today! We are at a market top or nearing a market top.
The last low was 6,547 on 9th March 2009.
If you buy now there is imo almost zero upside potential and plenty of downside.

When you hear people say things are different now, and the old rules don't apply ... run.

RobertKK

World population grows, so demand grows...

wonderwall900

Richard Hillman wrote: »

Uber because they will be behind driverless taxis.

Uber are struggling in Ireland vs Hailo/MyTaxi http://www.thejournal.ie/uber-ireland-plans-3-3398524-May2017/

That said, globally, I think they will be an absolute giant of a company in coming years. Taxi style cars are the tip of the iceberg for Uber.

So a sharp increase in the sale of video ads seems to be the main reason for their uptick in profit. This isn't suprising due to the prevalence of ad-blockers for traditional page ads.

However video ads are intrusive to the point where if I'm watching a video on facebook and it interrupts it with an ad i won't continue watching the video. Can't see advertisers in the long term getting the return they wish from such ads. If facebook showed how many people actually watched the whole ad I'd guess there is a big fall off.

diomed

wonderwall900

cisk wrote: »

If facebook showed how many people actually watched the whole ad I'd guess there is a big fall off.

I would imagine they have to show these kind of stats to advertisers and then the advertisers decide if it's worth spending anymore money with them.

ScumLord

Facebook provide a good product when it comes to advertising. It's cheap, instant and effective. It's a no brainer for any company, there's no reason not to run ads on it. Print seems like a waste of time in comparison.

valoren

diomed wrote: »

The Facebook P/E is 41.5 this months.
It will take 41 years to earn enough profit to reach the share value.

With new companies I wonder how they book profits. Do they anticipate revenue and profit on contracts? They can be creative. Remember Enron.

There is always big pressure, external and internal, to meet quarterly targets to please the stock market, and keep the share price and confidence high.

I avoid technology. In new industries like canals, railways, radio, motor, aviation, computers, internet, social media, everyone knows about it.
You are buying projections. These markets always have a lot of losers while they fight for supremacy, and often only a few winners.

I think Yahoo traded at a P/E of 630 when they were the search engine kings. Google arrived.

Every day people wash their faces / hair, brush their teeth, shave, eat, drink beer and will do that in the future. There are dominant companies in those industries. Identify the dominant companies and wait until prices are dirt cheap. Make a list today of the share prices of these solid companies, and write down a ridiculously low price you would like. Have the cash in a stockbroker account and have the courage to buy when it hits that price. For some reason people are afraid to buy when prices are low.

As I type this the Dow Jones (DJIA) is at 21,784. The high for the last nine years is 21,790 achieved today! We are at a market top or nearing a market top.
The last low was 6,547 on 9th March 2009.
If you buy now there is imo almost zero upside potential and plenty of downside.

When you hear people say things are different now, and the old rules don't apply ... run.

+1

I remember in February 2009 when the stock market was in the tank. You'd be a moron to 'invest' in any stock. I recall Starbucks stock was trading at circa $4 per share as it was driven down by massive sell off over the previous few months. I remember thinking it's trading at the price of a cup of their crappy coffee. I'm sure the thinking at the time was that the company would be decimated as people cut expenses and certainly weren't going to be spending money on $5 Latte's ever again.

But it was a financial crisis. The Cokes, the Colgates and the Starbucks' were all well run businesses. Their stocks took a hammering along with most. If I wasn't stupid, I'd have recognised that. I'd have said "I can buy it less than the coffee". I'd have seen that the company was in all probability going to last. If I had the cojones to buy say $10,000 worth of the stock at that time it would be worth $141,000 today. I am sure there were some who thought like that and made a very successful investment.

That's the key I think to making money in the stock market. As you say, take the very best companies in the world, accrue a very sizeable amount to invest, wait for the news to report of market crashes! Panics! etc and go all in.

I still kick myself to this day about Apple. I bought an iPod in 2004. I thought it was the business. If I was any way astute or investment-centric I'd have thought it might make a good investment, I was willing to pay almost €300 euro for one. I should have recognised that I wasn't the only one. If I had circa 10k to invest then, it would be worth $690,000 today with dividends reinvested. Sure, the price took a big beating a few times, but it was still the best investment opportunity I've had dangled beneath my nose.

Wossack

Speaking of.. At the end of the film forest gump, Lt. dann invests all the bubba gump money for Forest in some sort of fruit company (apple computer). We all chuckled at silly Forest when we saw the letterhead.

If you had invested just $1000 in apple in 1994 (when the film first came out), it'd be worth >150k today

Geuze

wonderwall900 wrote: »

Obviously no shares are completely safe, but I think those 3 companies, and maybe Uber too, could have far better growth potential over 20-30 years than something like a pension fund.

Pension funds are typically invested in shares like these.

A small pension fund I have owns:

APPLE INC 1.8%
MICROSOFT CORP 1.3%
JOHNSON & JOHNSON 1.1%
PROCTER & GAMBLE CO/THE 0.9%
FACEBOOK INC 0.8%
VERIZON COMMUNICATIONS INC 0.8%
GENERAL ELECTRIC CO 0.8%
BANK OF AMERICA CORP 0.8%
MERCK & CO INC 0.7%
PEPSICO INC 0.7%

eeguy

Bono will be happy

nice_guy80

Wossack wrote: »

Speaking of.. At the end of the film forest gump, Lt. dann invests all the bubba gump money for Forest in some sort of fruit company (apple computer). We all chuckled at silly Forest when we saw the letterhead.

If you had invested just $1000 in apple in 1994 (when the film first came out), it'd be worth >150k today

funny.
just watched Forrest last night

Stupid is as stupid does...

Dinarius

We currently have an entire economy predicated on zero interest rates. As a result, money has to find a home. It cannot be put on deposit.

So...

1. Stock markets rise

2. House prices rise; money is now as cheap to borrow as it will ever be. The corollary of this is that mortgage repayments are as cheap as they will ever be. They can only go up, while houses prices will, eventually, only go down. People buying now should be buying *only* on the basis of being able to repay a fixed rate mortgage. I doubt many of them are. (Ps. If and when rates do eventually rise, legislators should have the cojones to allow tracker mortgages to rise to meet, or approximate, those on variable rates; rather than having variable rates rise pari passu. But, I doubt they will.)

3. The art market has gone crazy. (The weekly art market report in Saturday's FT makes fascinating reading.)

With all this financial exuberance (insanity?), is it any wonder that those trying to take a more sober view have also sent the bitcoin market soaring?

The thing is though, can any government afford to increase rates? We at the edge of the cliff as it is. So, maybe this madness can continue for a while yet.

D.

wonderwall900

Dinarius wrote: »

2. House prices rise; money is now as cheap to borrow as it will ever be. The corollary of this is that mortgage repayments are as cheap as they will ever be. They can only go up, while houses prices will, eventually, only go down.

This is an interesting and for some a scary point. It is your thought that housing prices will reach a point where they will never rise again and just keep dropping?

I don't think that's ever been seen in any economic cycle ever before.

Dinarius

wonderwall900 wrote: »

This is an interesting and for some a scary point. It is your thought that housing prices will reach a point where they will never rise again and just keep dropping?

I don't think that's ever been seen in any economic cycle ever before.

Have we ever had an economic cycle where rates were, effectively at zero and, yet, the economy was seriously on the up? I don't know.

What we have now is an inversion, it seems to me. Usually, when an economy is in good shape, rates rise to temper it.

Because of the Euro and uniformity, we have one size fits all.

10 years ago, we had rates that were higher, and we still blew up. But, any (reasonable) % rise back then would have been small in relative terms to a similar rise now, in terms of its effect on the borrower. No?

House prices will fall if rates rise, I think. But, as with 10 years ago, they won't keep falling. An equilibrium is found. Something we have yet to find in the current market.

D.

TallGlass

wonderwall900 wrote: »

Uber are struggling in Ireland vs Hailo/MyTaxi http://www.thejournal.ie/uber-ireland-plans-3-3398524-May2017/

That said, globally, I think they will be an absolute giant of a company in coming years. Taxi style cars are the tip of the iceberg for Uber.

Uber is only struggling in Ireland due to themselves, they have no one else to blame, they continuously go to the regulator to push the agenda of no regulation.

Sorry, but that isn't going to happen. If they stopped pushing it and focused on providing there app to get regulated taxis to people then there would be an uptake of the service.

The regulator isn't going to move on an unregulated service in the ROI.

ScumLord

ScumLord wrote: »

Facebook provide a good product when it comes to advertising. It's cheap, instant and effective. It's a no brainer for any company, there's no reason not to run ads on it. Print seems like a waste of time in comparison.

What I find amazing is how cheap it is depending on the country. If you're looking at the UK and Ireland, then classically it's about 25-30cent per click, depending on different factors, but this seems to be the norm. Teenagers might drop down to 12cent. But I've seen India drop down to just 1cent a click.

This compares to Google Adwords, where you're looking at probably nearly a euro per click sometimes.

Capt'n Midnight

RobertKK wrote: »

World population grows, so demand grows...

Problem there is that peak population is supposedly about 11Bn so only 50% more growth.

Also expanding in to areas with poorer people means you have to wait until they get richer.

Cheerful Spring

Facebook don't make anything? It just a website where people go to post about their life's. Just imagine if everyone just stopped using it.,