Historically, Facebook was more expensive than it is today. We can also take a look at Facebook's historic valuation ranges in order to gauge whether the current valuation makes sense: In fact, I believe that Facebook, at 25x forward earnings and a revenue growth rate of 20%+, is more attractive than many stocks that trade at 23x forward earnings and that do not grow by anything close to 20%+ a year. Facebook trades at a small premium compared to the broad market, but that could very well be justified, based on Facebook's quality, moat, and compelling growth rates. Nevertheless, FB stock isn't really expensive, as shares are trading for 25x this year's expected earnings per share right now, which is pretty close to the S&P 500's ( SPY) 2021 expected earnings multiple of 23x (according to YCharts). In early 2021, shares had lagged the market, but more recently, Facebook's stock has experienced a sizeable uptick, and shares are trading very close to all-time highs today. Shares of Facebook have climbed by 45% over the last year, which is very close to the broad market's 42% total return over the same time frame. With shares trading at $335 each, Facebook is currently valued at around $940 billion, not far from the rare $1 trillion mark that has been breached by just a couple of stocks, such as Apple ( AAPL ) and Amazon ( AMZN ). is, thanks to massive profitability and a dominating position in social media, one of the highest-valued companies in the United States. This, combined with excellent fundamentals, a clean balance sheet, a healthy growth outlook, and an inexpensive valuation should result in considerable upside potential over the coming four years, although there are some risk factors that investors should keep an eye on. JuSun/iStock via Getty Images Article Thesisįacebook ( FB) is a dominant social media company in the markets it serves, and its moat makes it likely that it will continue to hold the top spots in this space with its social networks.
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