Facebook’s second-quarterly earnings are coming, is it finally time to invest?
Facebook Inc. has grown from being a college experiment to a company which has revolutionized the internet world. Facebook can be found on almost every website/blog/video on the internet due to its social embedded tools. And to no surprise the social media giant boasts about 1.65 billion active users every month with 1.09 billion being daily users on Facebook alone. Moreover, Facebook Inc. has made acquisitions which have proven to be beneficial for the giant.
It recently announced 500 million users on its media sharing service Instagram, which was a $1 billion acquisition in 2012 and two years after was appraised for $35 billion in 2014. Raising big money for the corporation and its investors. Another big acquisition was Whatsapp for $19 billion, which further proved that Zuckerberg is competitive when it comes to controlling his domination of social media at home or abroad. Whatsapp was a strategic move which saved Facebook’s international interests, if Google had bought the app, Facebook could have been shut out of the messaging era abroad.
But going back to the numbers, the company has grown exponentially since its IPO in 2011. It reported a revenue of $3.7 billion in 2011 and then $17.93 four years later in 2015. It also announced a free cash flow of $6.07 billion in 2015, and continued to dominate in 2016. The quarter one reports for 2016 showed a $5.38 billion revenue up 52% compared to last year. Nonetheless, the question remains, is Facebook going to continue keeping investors happy and if so how will it? The simple answer is advertising; the platform has grown its advertising platform to such an extent that it now controls 67.9% of social media advertising as reported by Emarketer. And this growth is expected to continue further in the coming year, with the platform growing rapid internationally. Another reason Facebook Inc. has its advertising figured out is its larger user base which can cater to every type business through target advertising and how well it actually works, advertisers are very happy from Facebook’s system and continue to roll in more money into advertising products on Facebook and Instagram.
Overall, it’s a good bet to invest in Facebook right now especially as the company grows its branches into virtual reality, drones, and cellular service. The company’s acquisition of Oculus promises positive results, however many of these products will take a couple of years to lift off and push the company’s value and stock. For now, it is expected that after the Q2 earnings for 2016 are released, the stock will push above its 52 week high of $122.57, which is a 16% up for the company from the previous year. Lastly, recent reports have also indicated a $145-$150 one-year target price for the corporate giant as growth is expected to continue.
The final verdict is the general consensus shared by many analyst, buy in while the stock is low and stay long for large gain. Facebook is just beginning with its plans for the future, rather be with Zuck and profit right?