Meta Platforms Inc / Facebook (META)

Terrific product. Finally delivering mobile revenue but doesn’t know whether it’s getting better profits or not. He prefers stocks that are trading at 15X earnings or less. Putting everything together this may be worth $12-$13 a share.

Has come off quite a bit from its IPO price but is still trading at a very high multiple. This is a name that everyone knows and they have lots of users but they have to generate money in advertising dollars. They have to compete with every other online advertiser.

Great company, but a lousy stock. It obviously has captured the imagination of people globally. Has a billion users but how do you make money out of them to justify the lofty price that the company demands? Still trading at 43X earnings.

Valuation makes a lot more sense today than it did at issue. GM announced they were going to stop advertising on Facebook at the time of issue, which was a big red flag. On the mobile side, it faces some serious problems on how they can get global advertising and become part of the top line. Until that is solved he expects there will be more insiders selling.

BV is about $5 a share and is trading at about 4X book. Company is expected to earn $.60-$.65 next year, which is about a 10% ROE. This sounds awfully rich to him. He has noticed a horrendous proliferation of ads on his own Facebook. If they can make that pay off, there may be a case to be made. However, if it turns out to be annoying, as he does, it may not work out.

“Bought at $21.60. Should I keep holding?” Really tough question as there is a big divergence of opinion. Stock collapsed quite a bit and is back in this pricing range/valuation range that most of the other Internet companies are exposed to, which means they are still relatively expensive. On the other hand it has an incredible franchise and we haven’t seen the potential of that franchise. Headwinds they face right now as a stock include “can they execute on mobility” and ”can they move beyond just display and bring up their Rpoos and cost per M clicks”. Trends don’t look good right now but if they turn, the stock could easily double over the next 5 years. Almost 1.3 billion shares coming out of lockup in November and another 400 million for sale in October. That is a lot of pressure on the stock. A lot of potential in the model.

Stock price indicates a mountain of unhappy shareholders. You want to find companies with strong business fundamentals along with price behaviour that support your view. Looking at their subscriber base and opportunities they have a bright future but you have to balance that off against the shareholder base that is largely unhappy. He would prefer to see a significant turn in the share price before he bought.

Depends on what price it is when the earnings start to become more material. Even at the current price, the multiple is still way too high. It’s probably in the area of 30 or 40 times this year’s earnings.

Will go down as one of the stock swindles of all times. Not a great business. Anyone can create an app and once people move to you, FB has to buy you. Wouldn’t touch it.

You should get a bounce about $21.48 and he thinks it will be a big up bounce. Don’t buy it here. A dangerous stock to trade. It needs to churn away for a while.