Skip to Content

US Videos

A Lot to Like About Facebook

Wide-moat social media company seeing growth in users, engagement, and online advertising as shares trade in 3-star territory.

A Lot to Like About Facebook

Jul 11, 2016

Ali Mogharabi: Facebook is the largest social network with more than 1.6 billion monthly active users. The growth in users and user engagement, along with the valuable data that they generate, make Facebook attractive to advertisers. The combination of these assets and continuing growth in online advertising bodes well for Facebook, as the firm generates strong revenue growth, remains cash flow positive, and profitable.

Apps that keep users engaged with Facebook's ecosystem have helped increase users and user interaction. With more user interaction, more data is compiled and then used by Facebook and its advertising clients to launch online target ads.

We think Facebook is going to continue to benefit from more ad dollars being spent on online advertising, especially mobile and social network ads where Facebook is very well positioned.

The company is taking steps to further monetize its various apps, such as launching interactive video ads and chat bots. It is also applying artificial intelligence, and virtual and augmented reality technologies to various products, which we think can increase Facebook user engagement even more, driving more revenue growth from advertisers in the future.

Our fair value estimate for Facebook is $120 per share. While we remain confident in Facebook's stable and wide moat, we do recommend a wider margin of safety before investing, given that the shares are trading in 3-star territory.

Transparency is our policy. Learn how it impacts everything we do

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

How we make money

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your personal data

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

Verify your identity, personalize the content you receive, or create and administer your account.
Provide specific products and services to you, such as portfolio management or data aggregation.
Develop and improve features of our offerings.
Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

How we approach editorial content

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.