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Spent the last few days considering a position in $FB and decided to pull the trigger executing @ $251
I was hesitant largely due to my existing position in $TWTR but landed with the view that they are different "trades" with a few shared risks
I was hesitant largely due to my existing position in $TWTR but landed with the view that they are different "trades" with a few shared risks
$FB at its core is a business that has:
- $716bn market cap
- healthy balance sheet
- $79bn of revenue with expected top line CAGR of 20%+
- 80%+ GPMs
- its a cash producing *machine* with continued double digit growth...
- $716bn market cap
- healthy balance sheet
- $79bn of revenue with expected top line CAGR of 20%+
- 80%+ GPMs
- its a cash producing *machine* with continued double digit growth...
Of course there are risks re:
- regulatory intervention looking to break up the business due to competition laws
- freedom of speech pressures given recent events
- on-going privacy concerns
However, I ultimately believe we are at "peak fear" on $FB
- regulatory intervention looking to break up the business due to competition laws
- freedom of speech pressures given recent events
- on-going privacy concerns
However, I ultimately believe we are at "peak fear" on $FB
This is shown in the current valuation vs its mega-cap peers. You need to believe you can look fwds a few years and the forecasted growth will continue (I do):
- LTM EV/Sales: 9.2x
- EV/Sales ('23): 5.4x
- LTM EV/EBITDA: 22.9x
- EV/EBITDA ('23): 10.5x
- LTM EV/Sales: 9.2x
- EV/Sales ('23): 5.4x
- LTM EV/EBITDA: 22.9x
- EV/EBITDA ('23): 10.5x
Once the hysteria around the outlined risks dissipates over the coming 12 months, I expect the market will rerate $FB back in line with S&P large cap avgs (bear in mind the cash profile and CAGRs) to 20x+ EV/EBITDA (est. Y3): 100% upside in next 12m
