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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (66344)	1/29/2021 5:16:25 PM
From: Elroy	Respond to of 78753

Last quarter: "Revenues increased 33% year over year to $28.1 billion and edged past the estimated $26.4 billion. The revenue growth represents the company’s fastest growth rate in more than two years." Yes, this is what I mean by I'm going to plead ignorance. Q4 2020 was way better than Q1-3. I don't know why, do you? I would want to know some reason why to figure out where things are heading. But at a minimum the latest report indicates business trends are accelerating, that's good no matter how you shake it. The profit margin on those sales is about 33%, maybe a little less. So from each of those dollars in revenue, FB is able to bring in about 33 cents to the bottom line. It doesn't get any juicier than that. Well, it does get better than that. Look at AVGO (old Broadcom) operating profit. I think it's about 55%! I have no idea how they manage astronomical numbers like that, but they do. But yes, 33% is great. 1.FB says line of sight to 2021 ad revenue is not clear. I don't know what that means. 2. FB is a good/great profit generator now. How much should an investor pay for that, i.e. is there a p/e where it's too expensive and are we there? Which you discussed. If the PE is 15x or 20x, and revenues are growing 30%..... or even 20%, I don't think valuation is a concern. In my view, the p/e (and thus price to pay for the stock now) is not too expensive at all. Of course, jmo, and I've been wrong many, many times. Maybe here as well. Yeah, I don't know much about FB's lines of business. I often wonder how they get such massive ad revenues when I use FB often and I think have never used one of their ads to buy anything. I understand ads on Google - the buyer gets his web site at the top of the rankings. But ads on FB? I've never bought a thing from FB ads, and consider them more irritation than anything else. I guess ads on TV are the same, but at least TV ads make some sense (that's where Coke and McDonalds build their brand, that's where we learn how to order MyPillow or whatever, but FB ads = ignore). Your comment from #1 above "line of sight to 2021 revenues is not clear" I would hate it if they actually said that. What the hell does it mean? I prefer it when management speaks in plain simple English, such as "We think our ad sales in Q1 2021 will slow down from the rapid pace in Q4 2020 because reason reason reason". Personally I would have a hard time buying the stock because my personal enjoyment of using FB over the years is declining each year, and that can't be good for FB long term. I'd much rather buy Google where I don't have an opinion about enjoyment or lack thereof in using Google, it's just 2nd nature to do so. And Googles ad service integrates into lots and lots of web sites, whereas FB (I think) is on it's own platforms, and those platforms can go out of vogue. In ten years I can see Facebook dying as "old social media", but Google seems like it's going to be around forever. But both are "new tech", so who knows?