The stock price of technology mega-giant Facebook Inc. (NASDAQ:FB) continues to soar, as the company finds new ways to turn open the profitability taps further. Facebook has utterly impressed me over the past decade, being one of the best investments over this time frame of nearly any company, despite its valuation. (Large-cap companies tend to have a harder time growing profits at the same rate).
This profitability increase has been driven by continued advertising growth across the company’s various platforms, and does not show signs of slowing. Many analysts believe we are still in the early innings of a major shift in the advertising world away from traditional media (think TV and radio) toward social media platforms, video sharing, and app monetization- key growth areas for Facebook and drivers of the company’s impressive recent performance. I do agree that advertisers will continue to shift their dollars and focus to platforms which are showing not only increased eyeballs, but also platforms that are able to capture the attention of users, like Facebook.
From a valuation perspective, Facebook is relatively "cheap," trading at a price to earnings multiple of 23, which is far lower than most growth focused technology stocks trading on the NASDAQ. Given the possibility for Facebook to continue to acquire companies that fit within its advertising model/portfolio nicely, as Whatsapp and Instagram have proven to be, we could see dramatic bottom line growth fueling the next leg of a run up in this company’s stock price, sending shares of Facebook parabolic.
I’m very bullish on Facebook’s long-term outlook at this point, and believe the company looks more than compelling at these levels.
Invest wisely, my friends.
