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Facebook Inc A FB

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Trump OKs Possible TikTok Deal; We Do Not Expect Much Impact on Facebook or Snap

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

On Sept. 19, President Donald Trump said that “in concept” he approved a possible TikTok deal with Oracle and Walmart, which increases the probability TikTok will continue to be available in the U.S. This does not change our views on wide-moat Facebook and no-moat Snap. As we wrote Aug. 2, a deal that will allow TikTok to continue operating in the U.S. could benefit Facebook (including Instagram) a bit but slightly hurt Snap. We continue to value Facebook at $265 and Snap at $18.

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Company Profile

Business Description

Facebook is the world’s largest online social network, with 2.5 billion monthly active users. Users engage with each other in different ways, exchanging messages and sharing news events, photos, and videos. On the video side, the firm is in the process of building a library of premium content and monetizing it via ads or subscription revenue. Facebook refers to this as Facebook Watch. The firm’s ecosystem consists mainly of the Facebook app, Instagram, Messenger, WhatsApp, and many features surrounding these products. Users can access Facebook on mobile devices and desktop. Advertising revenue represents more than 90% of the firm’s total revenue, with 50% coming from the U.S. and Canada, and 25% from Europe. With gross margins above 80%, Facebook operates at a 30%-plus margin.

1601 Willow Road
Menlo Park, CA, 94025
T +1 650 543-4800
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Aggressive Growth
Employees 52,534