Although Facebook Inc's stock performance has been good recently, it is still being questioned. People are worried about becoming addicted to social media and wonder if it is good for society. The company was so powerful that it had an impact on the 2016 election and was even suspected of being manipulated by Russian agents.
In the recent headlines about Facebook Inc, there are mostly negative comments. Facebook Inc Company also conducted self-reflection and asked users for opinions.
Despite frequent negative comments, Facebook Inc's performance is very good.
Despite its disappointing performance over the past two years, Facebook Inc's shares have soared 76 per cent since then. A few weeks ago, the company announced that it would reduce the content of news and online short films, increase friend interaction, and encourage social interaction. This has reduced the use of applications and has had a big impact on investors. Data show that Facebook Inc's daily active users declined for the first time in North America last quarter, resulting in user fatigue.
But these declines are only temporary, and investors don't need to worry too much.
Looking at the performance data alone, Facebook Inc still has the advantage of attracting investment:
Revenue rose 47 per cent to $40.7 billion
Net profit rose 56% to $15.9 billion
Operating profit margin of 50%
The price-to-earnings ratio is 33
Such growth, profit margins and valuations are rare. Despite the doubts, Facebook Inc's growth rate is much faster than that of Amazon.Com Inc, and its operating profit margin is higher than that of almost all listed companies.
Facebook Inc has a strong performance and still has investment potential for the following reasons:
1. The favor of advertisers
Facebook Inc's advertising business continues to grow. The company provides personalized services for advertisers and accurately locates potential customers according to age, gender, interests and other characteristics, breaking the traditional marketing method.
Facebook Inc also provides advertisers with detailed data on advertising activities, such as impressions, potential impact, clicks and application installation, so that companies can judge themselves. Personalized service makes Facebook Inc surpass his competitors (Twitter, Snapchat) and challenge the traditional advertising platform.
2. The rise of Instagram
Although Facebook Inc received poor reviews when Facebook Inc bought Instagram in 2012, its sister website Instagram is doing well. In September, Instagram had more than 800m monthly users and its members grew by about 30 per cent a year, far surpassing its competitors Twitter and Snapchat.
Instagram absorbs the advantages of Snapchat and uses network effects and built-in advantages to expand its influence among advertisers.
3. The number of users is still strong.
Although the usage of Facebook Inc users has decreased, the overall number of users is still on the rise. In the most recent quarter, the number of daily and monthly users grew by 140 million and 2.13 billion respectively. But Instagram separates some users, and teenagers prefer Instagram to their older parents.
At the same time, with Facebook Inc Messenger and WhatsApp, the company has four websites with more than 1 billion users.
Given Facebook Inc's strong network effect, a large-scale sell-off will not occur and will not be affected by rivals Twitter and Snapchat. Facebook Inc has a bright future, and it is unwise to short its stock just because of a decline in the number of users.
This article is translated from The Motley Fool, compiled / Wu Nan, proofread / Xin Menghan