Has Facebook Just Presented Investors With A Rare Buying Opportunity?

Between GameStop, AMC, Apple, and Tesla, one pretty impressive earnings report seemed to fly under the radar.

Jan. 28, 2021

I am aware that, earlier this week, I commented on the fact that we rarely focus too much on earnings reports as we try to keep a long-term mindset here.

However, this has not been a normal week!

GameStop and AMC, two businesses on their way down even before the pandemic, are the most-traded stocks on Wall Street; there’s still a global pandemic going on that is preventing me from getting a pint in my local pub; and — weirdest of all — I’m actually impressed by Facebook (NASDAQ: FB), a company I regularly refer to as “the center of all evil on Earth”.

What’s up with Zuckerberg & Co?

A lot, apparently. 

As you can probably tell, I am not Facebook’s biggest fan from an ethical perspective. However, even I will give kudos where it’s due.

Despite all the controversy and criticism that Facebook draws to itself, last quarter it grew total revenue by 33% and net income by 53%. All this with a mega-market cap of ~$780 billion. These numbers would be impressive for a growth stock, never mind one of the largest businesses on the planet. 

There is so much more going on that Wall Street doesn’t appear to have noticed though:

  • Despite constant analyst warnings of declining numbers, it is still experiencing net growth, while its total daily active users (DAUs) reached 2.8 billion in Q4, up from 2.74 billion in Q3.
  • It is still managing to monetize its users far more efficiently than anyone else, with worldwide average revenue per user jumping from $7.89 in Q3 to $10.14 in Q4. 
  • 3.3 billion people use one of Facebook’s products every month. 2.6 billion people use one of its platforms daily — that’s roughly 33% of the world’s population on a daily basis. Staggering. 

There is a lot more that could be looked at here, such as its planned $25 billion stock buyback, its growing Oculus sales numbers, or the $62 billion in cash and assets on its balance sheet. In the bear camp, however, there is also the dark, overhanging cloud that is Apple’s new privacy policies, which are set to affect Facebook’s ad revenue on iOS devices. You can read more about it on our blog here.  

Stuffed between the madness of what has been 2021 so far and more popular earnings, Facebook’s stock is currently down premarket. Based on the numbers it’s showing us, this represents a much better — and safer — buying opportunity than $GME, $AMC, and all of the other meme-stocks that everybody is too focused on buying.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above.