Should you invest in Facebook?

Facebook is definitely a boss among all existing social networks. We bet that even your grandma once asked you to register her on Facebook. Anyway, today we are not going to discuss FB features, cause it’s damn obvious. Instead, we are going to discuss something more intriguing – Facebook stocks investment.

FB has gone public in 2012. Its debut on NASDAQ Facebook started with $38 per share. In just 5 years, FB stock price almost quadrupled, making Mark Zuckerberg even richer guy than he previously was.

Recent Facebook Rally

On July 27, FB shares rose by 6%. The move did not come at a drop of the pencil, as it had been followed by the Q2 earnings report. Second quarter earnings have simply beaten any previous analysts’ expectations, including ours. The reported FB Q2 revenue was $9.32 billion, which is around 45% higher than the previous year Q2 revenue. Moreover, we have also seen an immense rise of Facebook’s EPS – $1.32,  a 70% increase over the year. Before FB Q2 earnings, most analysts projected EPS to be between $1.12 – $1.13. As you can see, Facebook managed to trigger investors’ orgasms. Again.

Overall, since the beginning of the year 2017, FB stock price appreciated by nearly 44%. If the stock rises further, Facebook will join an exclusive club of companies with the market cap exceeding $500 billion.

Global audience increases

It seems that Facebook’s rising popularity is not running out of steam. The number of monthly active users reached 2 billion in the second quarter and 1.32 billion of daily active users.

It is also worth mentioning another Facebook’s subsidiary – Instagram. While Snapchat is becoming an even bigger pile of shit, Instagram is believed to bring around $3.92 billion in revenues as for the year 2017. This is twice as much as the year before. Another reason to think about FB stocks investing.

How does Facebook actually make money?

Facebook is steadily delivering exciting earnings and growth. However, it is hard to pinpoint what is their source of income at first glance. There is a good saying: “If you don’t pay for the product, you are the product”. This is especially true for Facebook, which is mainly making money on the digital advertisements. Specifically, the company favors targeted advertising. It allows using tons of personal profiles’ data for ads. With a great advertising product portfolio, Facebook provides an opportunity to target different kinds of users based on their income, region, religion, political views and sexual orientation.

What future can we project for Facebook?

As pointed by Facebook’s CFO David Wehner, Facebook revenue growth will come down to a reasonable level in the next two quarters. He emphasized that the ad load role in the revenues is going to diminish. For this reason, FB counts on Messenger and WhatsApp as its revenue growth engines.  Besides that, Facebook is also currently investing in the emerging technologies such as virtual reality to meet its long-term horizon goals.

So, it is worth to invest in Facebook shares? Hell yeah! Holding the stock might pay off quite well. However, investors should as well consider that buying at the peak right now is not a great option. Once the revenue growth decelerates, the FB stock will definitely become cheaper.

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