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FACEBOOK (FB) STOCK ANALYSIS: Is it a Value Trap? Buy the Dip? - YouTube
Channel: unknown
[0]
hi everyone this victor here as you may
[1]
already know facebook or meta stock
[3]
dropped as much as 26 right after its
[6]
recent earnings release this is the
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largest drop in market cap in recent
[10]
history there are many reasons for this
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large drop for example facebook reported
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the first drop in daily active users
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compared with the previous quarter
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facebook's revenue growth and daily
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active research growth have slowed down
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a lot in recent quarters facebook is
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facing a lot of competition from
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takedown and has problems attracting new
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users also apple's ios app tracking
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option is impacting facebook's
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advertising business a lot all these
[33]
things combined have caused facebook
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stock to drop as much as 26 after its
[38]
earnings release so in this video i will
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talk about is facebook stock and value
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trap or is it still a great company for
[44]
long-term investing i will cover these
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topics in this video first facebook's
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increasing competition with tech talk
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and slowing user growth second apple's
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app tracking option thus impacting
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facebook's advertising business third
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facebook's meta wars business fourth is
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facebook stock and while you trap or
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still a great company for the long term
[64]
fifth facebook stock evaluation and
[66]
sixth diy facebook stock if you like
[68]
this video make sure to hit the like
[70]
button subscribe and turn on the
[71]
notification button i will continue to
[73]
make many extra like stock analysis and
[76]
investing videos a week that will help
[78]
you become a great investor also if you
[80]
like this channel and want to support it
[82]
check out my patreon blog in the video
[83]
description and become a premium member
[86]
our goal is to help all members grow
[88]
their stock portfolios to over 7 figures
[90]
over time with their support we'll be
[92]
able to stay independent hire other
[94]
outstanding analysts to cover different
[96]
stocks and create many excellent stock
[98]
analysis and investing videos a week
[100]
that will help you become a great
[101]
investor the link is in the video
[103]
description take a look let's start so
[105]
why did facebook stock drop as much as
[107]
26 right after its earnings release
[109]
there are many reasons the biggest
[111]
reason is that facebook's daily active
[113]
users and advertising revenue growth
[115]
have slowed down significantly in the
[117]
most recent quarter facebook is facing a
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lot of competition from tick tock and
[121]
apple's ios 14.5 amp tracking option is
[124]
affecting facebook's advertising
[125]
business a lot for example management
[127]
said we expect first quarter 2022 total
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revenue to be in the range of 27 to 29
[133]
billion which represents 3 to 11
[136]
year-over-year growth we expect our
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year-over-year growth in the first
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quarter to be impacted by headwinds to
[141]
both impression and price growth in
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comparison facebook's total value grew
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20 year over year in the q4 quarter
[148]
before that facebook's total revenue
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grew 35 year-over-year in the period sq3
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quarter in terms of daily user's growth
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facebook's daily active users dropped 1
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million from 1.93 billion in q3 to 1.929
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billion in q4 this is the first time
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facebook's daily active users have
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dropped compared with previous quarters
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the main reasons that facebook is facing
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a lot of competition from takedown the
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most popular social media platform for
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short form videos facebook is having
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problems attracting new users especially
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young adults mark zuckerberg said this
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in the recent earnings call the first is
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competition people have a lot of choices
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for how they want to spend their time
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and apps like tech talk are growing very
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quickly and this is why our focus on
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reviews is so important over the long
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term as is our work to make sure that
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our apps are the best services out there
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for young adults which i spoke about on
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our last call the second area and
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related to this is that we're in the
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middle of a transition on our own
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services and start short from video like
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views so as more activities shifts tired
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the medium we're replacing some time in
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news feed and other higher monetization
[211]
services so as a result of both
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competition and this shift to short for
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video as well as our focus on serving
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young adults over optimizing overall
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engagement we're going to continue to
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see some pressure on impression growth
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in the near term now i'm confident that
[226]
leaning harder into this trend is the
[228]
right short-term trade-off to make in
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order to get long-term gains we have
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made these types of transitions before
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with mobile feed and stories where we
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talk on headways in the near term to
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align with important trends over the
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long term and while video has
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historically been slower to monetize we
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believe that over time short form video
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is going to monetize more like fee or
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storage than like watch so i'm
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optimistic that will get to where we
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need to be with wheels too as of now
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tank top is growing much faster than
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facebook takedown already has over 1
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billion monthly active users according
[258]
to this website you can see tecton's
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monthly active users have been going
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very quickly in the previous quarters in
[264]
comparison facebook's multi-active users
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have been growing much slower in the
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past quarters here is another problem
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shuffle videos are very popular now and
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people are spending a lot of time on
[274]
these software videos title is the most
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popular social media platform for short
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form videos and it's very popular among
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younger users facebook is having
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problems attracting more new users
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especially the younger adults because
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many younger users are spending more
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time on tech talk than facebook facebook
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tends to attract older audiences this is
[292]
why facebook's daily active users
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actually drop 1 million in the recent
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queue for quarter and the recent
[297]
earnings call facebook's management
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admitted that take talk is facebook's
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biggest competitor management said this
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i think what we said about overall kind
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of user growth is what we're certainly
[306]
seeing an impact from strong competition
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particularly with younger audiences so
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that's true and we're kind of seeing
[312]
that globally another large problem
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facebook is facing is apple's ios 14.5
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app tracking option the ios app tracking
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option lets users all out of apps
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tracking their activities across
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different apps and websites for example
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if you download the takedown apps on
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your iphone it will ask for your
[327]
permission to track your activities
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across other companies apps and websites
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so takedown can give you more
[333]
personalized ads based on your interests
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this app tracking option will also
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appear when you download the facebook
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app on your iphone here is the problem
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most people will choose not to be
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tracked because most people want more
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privacy this is why apple's app tracking
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option will continue to have a large
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impact on facebook's advertising
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business going forward because it will
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be much harder for facebook to give
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personalized ads to users with fewer
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data management settings first ads like
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others in our industry we have face
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headwinds as a result of apple's ios
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change as we described last quarter
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apple created two challenges for
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advertisers one is that the accuracy of
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our ads targeting decreased which
[369]
increased the cost of driving outcomes
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the other is that measuring those
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outcomes became more difficult and we
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believed our impact of ios overall as a
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headwind on our business in 2022 is on
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the order of 10 billion so it's a pretty
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significant headwind for our business
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and we're seeing that impact in a number
[385]
of verticals e-commerce was an area
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where we saw a meaningful slowdown in
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growth in q4 and similarly we have seen
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other areas like gaming be challenged
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and if you look at it we believe those
[395]
restrictions from apple are designed in
[397]
a way that carves out browsers from the
[399]
tracking problems apple requires for
[400]
apps and so what that means is that
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search ads could have access to far more
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third-party data for measurement and
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optimization purposes is that app-based
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app platforms like ours so when it comes
[410]
to using data you can think of it that's
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it's not really apple's apple for us and
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as a result we believe google search ads
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business could have benefited relative
[419]
to services like ours that face a
[421]
different set of restrictions from apple
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and given that apple continues to take
[425]
billions of dollars a year from google
[426]
search ads the incentive clearly exists
[429]
for this policy discrepancy to continue
[431]
apple's app tracking option benefits
[433]
google's advertising business a lot at
[435]
the expense of facebook because google
[437]
ads are based on what you search on
[439]
google and youtube for example if you
[441]
always search stock analysis videos on
[443]
youtube or google search google will
[445]
give you more ad style related to stock
[447]
investing in comparison facebook needs
[449]
to track your activities across
[450]
different apps and websites in order to
[452]
give you more personalized ads that are
[454]
based on your interests because of
[455]
apple's app tracking option i believe
[457]
many advertisers are shifting their app
[459]
budgets from facebook to google and
[461]
possibly to tic toc this is why google
[463]
reported large earnings speeds while
[465]
facebook reported large earnings missed
[467]
in the most recent q4 quarter personally
[469]
i believe this trend will continue for
[470]
at least several quarters until facebook
[472]
finds better ways to target ads with
[474]
fewer user data than before and until
[477]
facebook finds better ways to measure
[478]
app performance for advertisers here's
[480]
another problem for facebook the company
[482]
is still losing a lot of money from its
[484]
metalworks business called reality labs
[486]
reality labs include augmented reality
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ar and virtual reality vr headsets and
[490]
app cells on the oculus store if you
[491]
look at this here you can see reality
[493]
labs revenue has been growing at much
[495]
faster rate than facebook's advertising
[497]
business however reality labs is also
[499]
losing business every year for example
[501]
in fiscal 2021 reality labs had 2.3
[504]
billion of revenue but he had an
[506]
operating loss of 10.2 billion here is
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the important part facebook still earns
[510]
around 97 of its total value from ads
[514]
all facebook's operating income is from
[516]
facebook's family of apps which includes
[518]
facebook instagram messenger and
[521]
whatsapp this means facebook will
[523]
continue to use its advantage from
[524]
facebook and instagram to fund reality
[526]
labs until this business becomes
[528]
profitable all these headwinds combined
[530]
have caused facebook stock to drop as
[531]
much as 26 right after it releases queue
[534]
for earnings so here is the important
[536]
question is facebook stock a world champ
[538]
or is it still a great company for
[539]
long-term investing personally i believe
[541]
facebook is not a wealthtrack because
[543]
facebook is still innovating and
[545]
creating new products such as instagram
[547]
wheels meta quest vr headset and the
[549]
upcoming air classes i believe these new
[551]
products and services will eventually
[553]
lead to higher daily active users growth
[555]
and high ad revenues for facebook
[557]
however in the short term i believe
[558]
facebook will still face many headwinds
[560]
that i mentioned earlier facebook's
[562]
business will likely still underperform
[564]
over the next several quarters because
[565]
facebook's daily users growth and ad
[567]
revenue growth have slowed down
[569]
significantly in recent quarters mark
[571]
zuckerberg said there are several major
[573]
investment priorities for facebook these
[574]
investment parties are reals committee
[577]
messaging commerce ads privacy ai and
[580]
the meta words according to the latest
[582]
earnings call mark zuckerberg explained
[584]
the importance of growing views to
[586]
attract more younger users going forward
[588]
he said the first one is reals it's
[590]
clear shot from video will be an
[592]
increasing part of how people consume
[594]
content moving forward and views is now
[596]
our fastest growing content format by
[598]
far it's already the biggest contributor
[600]
to engagement growth on instagram and
[602]
it's growing very quickly on facebook
[603]
too as we continue to improve tools for
[606]
creators ranking for people watching and
[608]
as we roll out the product everywhere
[610]
across the world we expect this will
[611]
continue growing quickly so looking
[613]
ahead we're investing in simplifying
[615]
video across instagram building more
[617]
great creative and monetization tools
[618]
for creators and helping more people
[620]
discover and interact with relevant
[622]
views based on my personal experience
[624]
using instagram views i believe it will
[626]
eventually capture to take down in short
[628]
form videos and help facebook attract
[630]
more younger users especially younger
[632]
adults of course it will take facebook
[634]
more time to monetize instagram views
[636]
facebook is focused on improving
[637]
instagram views first and getting more
[639]
creators to create more engaging content
[641]
first before adding more ads on reals
[644]
facebook's second and the most important
[645]
long-term growth catalyst is this
[647]
meta-worst business called reality labs
[649]
in my opinion i believe vr and ar
[651]
headsets especially ar glasses will be
[653]
the next computing platform after the
[655]
iphone right now facebook's advertising
[657]
business is subject to apple's ad
[658]
tracking and advertising policies and
[660]
google's android tracking policies for
[662]
facebook to grow its advertising
[664]
business further facebook will need to
[665]
own its hardware since apple's ios and
[668]
google's android os already dominate the
[670]
smartphone market facebook is focused on
[672]
developing the nest computing platform
[674]
which is vr and ar headsets the most
[676]
important product will be facebook's
[678]
upcoming air glasses because i believe
[680]
ar glasses will eventually become a mass
[682]
consumer product similar to the iphone
[684]
mark zuckerberg said this now the last
[686]
investment priority here is the
[687]
metalworks we're focused on the
[689]
foundational hardware and software
[690]
required to build an immersive embodied
[692]
internet that enables better digital
[694]
social experiences than anything that
[696]
exists today we're working towards a
[698]
release of a high-end virtual reality
[700]
headset later this year and we continue
[702]
to make progress developing project
[703]
necessary which is our first fully
[705]
augmented reality ar glasses zuckerberg
[708]
also said this there's been this
[709]
long-term trend that i commented on a
[711]
number of times where over the time that
[713]
i've been running this company 18 years
[715]
this week basically we have gone from
[717]
text being the primary way that people
[719]
share and consume content online at the
[721]
beginning of the early 2000s today we
[723]
got cameras on our phones and photos
[725]
became the primary thing and now that
[727]
mobile networks are starting to get
[729]
really good video is really becoming the
[731]
primary thing and it's a lot more
[733]
natural engaging this is partially by
[735]
the way why i think that an even more
[737]
immersive format around virtual reality
[739]
and augmented reality is going to be the
[740]
kind of next step of the video and why
[743]
we're so invested there but definitely
[744]
what we're seeing with short phone video
[746]
is it's the next step from the kind of
[748]
visual feeds that we have and the amount
[750]
of engagement and content that people
[752]
want to share and interact with and
[754]
we're just taking it and send it to a
[756]
friend in messaging or commenting online
[758]
or just having fun watching it
[760]
themselves it's in general we're seeing
[762]
people spend a lot more time on this
[764]
than what we have seen from apps so far
[765]
and that's also reflected in the success
[767]
that other apps like tech talk have had
[769]
so there's a lot more to go here
[771]
realistically i do not expect facebook
[773]
will have the same high revenue growth
[774]
rate as before because facebook's user
[776]
base is much larger now and facebook
[778]
already has very high penetration in
[780]
north america however if facebook's
[782]
instagram views succeed in attracting
[784]
younger users and in facebook's upcoming
[786]
ar class has become the next computing
[788]
platform then i believe facebook's daily
[790]
active users and ad revenue growth will
[792]
eventually pick up again let's talk
[794]
about facebook stock valuation i always
[796]
use these intrinsic wire calculator to
[798]
calculate the stock's fair interest
[799]
value so i will know whether the stock
[801]
is over while you're fairly wide or
[803]
undervalued if you want this interest
[804]
rate calculator you can download it in
[806]
my patreon blog in the video description
[808]
these are the key assumptions first i
[810]
define facebook's intrinsic y as its
[812]
future cash flows discarded to the
[814]
present day the discount rate is 10 this
[816]
is slightly higher than the 7 cost of
[818]
equity calculated by feedingbox.com you
[820]
can always use a higher discovery here
[822]
if you want to be more conservative
[824]
facebook's most recent 12 months of free
[826]
cash flow is 38.44 billion based on the
[828]
major headwinds i talked about earlier i
[830]
believe facebook's free cash flow will
[832]
grow at a much lower rate than before at
[834]
a compound annual growth rate c agr
[836]
between 5 and 15 over the next five
[839]
years to calculate the terminal right at
[841]
the lva5 we're using both the perpetual
[843]
growth model and the exit multiple model
[845]
here then we take the average of both
[847]
models to calculate the terminal value
[848]
let's go for these three case scenarios
[850]
the worst case the normal case and the
[852]
best case scenarios under the worst case
[854]
scenario we're using a compound and
[856]
you'll go through a cag of five percent
[858]
if you forecast facebook's free cash
[859]
flow to the next fires and discount the
[861]
free cash flow to the present day
[863]
facebook's interest rate should be
[864]
around 640 billion for the entire
[866]
company or 235 dollars per share i'm
[869]
giving this scenario a 25 probability
[871]
here under the normal case scenario
[873]
we're using a compound and you'll go to
[875]
a char of 10 percent if we forecast
[877]
facebook's free transfer to the next
[878]
five years and discount the fuel
[880]
stressful to the present day facebook's
[882]
interest rate should be around 788
[884]
billion for the entire company or 290
[886]
dollars per share i'm giving this
[888]
scenario of 50 probability here under
[890]
the best case scenario we're using a
[892]
compound and it'll go through a cag of
[894]
15 if we forecast facebook's free cash
[897]
flow to the next five years and discount
[898]
the free cash flow to the present day
[900]
facebook's intrinsic while you should be
[902]
on 964 billion for the entire company or
[904]
354 dollars per share i'm giving this
[907]
scenario a 25 probability here if we add
[910]
all these numbers here facebook's fair
[912]
interest rate should be around 292
[914]
dollars per share this means facebook or
[916]
meta stock is slightly under value at
[918]
the time of making this video in
[919]
comparison morningstar gave a much
[921]
higher farewell sharing for facebook at
[923]
400 per share so did i buy more facebook
[926]
stock yes i bought more facebook shares
[928]
right after the company missed its
[930]
earnings and right after the stock
[931]
dropped as much as 26
[933]
i have been a long-term shareholder in
[935]
facebook for several years already my
[937]
plan is to continue investing in
[938]
facebook for at least 10 years as long
[941]
as the company is continually innovating
[942]
and creating many great products such as
[944]
instagram reels quest vr headsets and
[947]
the upcoming air glasses in the short
[949]
term over the next several quarters ivy
[952]
facebook's business will likely
[953]
underperform because the company is
[955]
facing a lot of competition from
[956]
takedown facebook's daily active users
[958]
and random growth have slowed down a lot
[960]
in recent quarters and the ios app
[962]
tracking option is having a large impact
[963]
on facebook's advertising basis however
[966]
in the long term ib facebook's daily
[967]
users growth and advertising business
[969]
will eventually recover because facebook
[972]
is now focused on growing instagram
[974]
views to attract younger users facebook
[975]
is also focused on creating the next
[977]
computing platform vr and ar glasses
[979]
that will become the foundation of the
[981]
metalworks now all these analysis and
[984]
estimates are only my opinions based on
[985]
my research they are not financial
[987]
advice you will need to do your own
[989]
research and do your extra due diligence
[990]
first before investing in anything it is
[992]
important to always invest in you know
[994]
and not speculate if you like this video
[996]
make sure to hit the like button
[998]
subscribe and turn on the notification
[1000]
button i will continue to make many
[1002]
excellent stock analysis and investing
[1004]
videos a week that will help you become
[1005]
a great investor also if you like this
[1007]
channel and want to support it check out
[1008]
my patreon blog in the video description
[1010]
and become a premium member our goal is
[1012]
to help our members grow their stock
[1014]
portfolios to over seven figures over
[1016]
time with your support we'll be able to
[1018]
stay independent hire other outstanding
[1020]
analysts to cover different stocks and
[1022]
create many excellent stock analysis and
[1024]
investing videos a week that will help
[1026]
you become a great investor the link is
[1028]
in the video description thank you for
[1029]
watching this video and supporting our
[1031]
channel this victor from the
[1032]
international investor channel and i
[1033]
will see in the next video
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