November 7, 2018

FB – Management’s confidence in advertising, user engagement, and active users imply market expectations are too bearish, and upside is warranted


  • Facebook, Inc. (FB:USA)currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 15.0x Uniform P/E. At these levels, markets are pricing in extremely bearish expectations for the firm, which appears unwarranted, given management’s confidence in their improved advertising efficiency, growing user engagement rates, and monthly active users
  • Specifically, management is confident that 2.3 billion people now use Facebook every month around the world. They are also confident that their user engagement continues to grow at a faster rate in developing countries. Additionally, they are confident that advertising on Facebook’s feed has become increasingly relevant to individual users
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