February 12, 2019

FB – Management’s confidence in advertising and Watch tab consumption imply market expectations are too bearish, and upside is warranted


  • Facebook, Inc. (FB:USA) currently trades below historical averages relative to UAFRS-based (Uniform) Earnings, with a 14.8x Uniform P/E. At these levels, markets are pricing in extremely bearish expectations for the firm, which appears unwarranted given management’s confidence in the advertising potential of their platforms, and developments in the Watch tab
  • Specifically, management is confident about growth opportunities for their advertisement business and the rapid adoption of their marketing tools by smaller advertisers. Additionally, management is confident about their capex investments, and ability to increase active consumption on the Watch tab
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