Social Media Stocks: The Next Decade Belongs to Facebook Inc
Facebook Stock Price
There is simply no stopping Facebook Inc (NASDAQ:FB) at this point. Every time that people believe the meteoric rise of the FB stock price is about to falter, the company comes out and beats earnings reports, expectations, and naysayers—everyone, basically—once again outperforming analyst projections.
The company’s stock chart is one continuous upward climb since about mid-2013, which is an impressive run, considering how many of its rival social media stockshave fared. With everything from its technology to its mobile ad sales, to even rumors about Mark Zuckerberg running for president in 2020, it does seem that Facebook is primed to take over the world.
That means investors ought to take note of Facebook stock.
I’ll demonstrate why I believe that the Facebook stock price could easily hit beyond $200.00/share before 2018, and why the company is poised to continue outperforming expectations, and will continue its unbelievable run as one of the best tech stocks around.
Facebook Is an Elite Social Media Stock
Our first order of business is to create a little context around the Facebook stock price, which will help explain why the company is so special.
Beyond the Facebook stock price being one of the better investments this year, when looking at its competitors, it’s easy to see why FB stock is the dominant social media stock.
Let’s start with an older rival, Twitter Inc (NYSE:TWTR). Twitter stock’s troubles have been well documented for some time now, but, when compared to Facebook, it’s clear just how far in the dust Twitter is.
Facebook has had a strong user growth rate ever since it started. The company has even surpassed two billion monthly users, which is an all-time record, and good enough for the single most used social media app in history—probably the most used program in the world. Looking through history, other than a few mainstays (wheels, fire, spear), there has rarely been a technology as ubiquitous as Facebook.
Data courtesy of Statista
In fact, looking at the stats of social media companies, the only apps with more than a billion users are Facebook, “WhatsApp,” “Facebook Messenger,” and “YouTube.” And the kicker? Facebook owns WhatsApp, making YouTube (owned by Alphabet Inc (NASDAQ:GOOG)) the only other social media app that has even comes close to Facebook. (Source: “Facebook now has 2 billion monthly users… and responsibility,” TechCrunch, June 27, 2017.)
Twitter, on the other hand, is in the exact opposite situation. Its user growth has been mired in stagnation for years, and is one of the primary reasons that Twitter stock has taken such a beating.
Also Read: Snapchat vs Facebook: The Hottest Social Media Stock for 2017
From 2010 until Q1 of 2015, the company saw huge growth numbers, going from 30 million monthly active users (MAUs) to more than 300 million. But then the wheels came to a grinding halt, and the company has not been able to pass the 328-million MAU mark. Twitter even registered no growth whatsoever from the first quarter of 2017 going into Q2, with a predictable stock crash coming soon after. (Source: “Number of monthly active Twitter users worldwide from 1st quarter 2010 to 2nd quarter 2017 (in millions),” Statista, 2017.)
Facebook, by contrast, on its way toward two billion users, never registered fewer than 30 million new users, quarter after quarter. (Source: “Number of monthly active Facebook users worldwide as of 2nd quarter 2017 (in millions),” Statista, 2017.)
So, in the land of social media stocks where user growth is king, Facebook has planted itself on the throne and shows no signs of abdicating.
Another competitor that bears examination is the young upstart Snap Inc (NYSE:SNAP).
Snap, the owner of the social media company Snapchat, has turned into an absolute disaster for every investor that didn’t short the shares.
After some fleeting initial success, SNAP stock plummeted from a high of over $24.00 a share to its current price of $13.81, as of this writing.
The company has suffered a 43% drop in its few short months on the open market, and the falls only continue as the lockup period ends, which means that insiders like early investors and employees will be able to ditch their shares. The projected fall is going to probably only worsen SNAP stock’s outlook. (Source: “Snap shares fall as investors brace for potential wave of insider selling beginning next week,” CNBC, July 28, 2017.)
So, when it comes to social media stocks, it’s a tough business. Snap is learning that the hard way. But the important part of this story for Facebook bulls is that the social media company, despite all its friendly emojis and all things cute and shareable, is not to be messed with.
You see, Facebook approached the Snapchat founders years ago with an offer to buy the company. The Snap owners refused, and that seemed to be the right choice at the time. After all, their share value when they went public was (and still is) worth far more than the $3.0 billion offered in 2013.
But, since that failed deal, Facebook has essentially gone out of its way to crush Snapchat.
Through “Instagram,” Facebook has outright copied some of Snapchat’s most popular features, and has basically attempted to one-up the social media rival at every turn. In fact, Instagram and its ability to hamper Snapchat’s growth is one of the reasons that Snap stock is performing so poorly. The fact that Snap went as far as to re-brand itself as a camera company before it went public (even though the only camera it has ever produced was a pair of camera glasses) is telling, in terms of the power that Facebook wields.
Which is to say that Facebook is dominant among social media stocks. As evidenced by Snap’s failed run (so far, at least), it’s going to be hard to unseat the giant because it has the resources to either outspend you, outlast you, or eat you up if it at all feels threatened.
Facebook Stock Earnings and Mobile Ad Sales
As I mentioned earlier, Facebook stock once again outperformed expectations in virtually every way, as the following chart illustrates.
Chart courtesy of StockCharts.com
The earnings per share (EPS) registered as $1.32, versus the anticipated $1.13. Revenue hit $9.32 billion, versus the projected $9.20 billion. Mobile ad revenue clocked in at $8.0 billion, versus the $7.68 billion projection. Monthly users passed two billion, while the company was only expected to register 1.98 billion. Capital expenditures came in at $1.44 billion, instead of the projected $1.73 billion. (Source: “Facebook stock jumps after company beats on earnings and says it will spend less,” CNBC, July 26, 2017.)
Facebook overtook Amazon.com, Inc. (NASDAQ:AMZN) as the fourth-most-valuable technology company in the United States. Its market cap even hit $500.0 billion at one point, before slipping slightly down below that lofty threshold.
Also Read: 3 Top Social Media Stocks for 2017
As far as social media stocks go, Facebook is so far in the lead that competitors are nowhere close to even nipping at the company’s heels. FB stock is on the upswing, and has continued to be on the upswing pretty much right from the get-go. While other companies rise and fall, Facebook seems only to rise.
The future of Facebook stock looks extremely bright. The Facebook stock price is likely to hit $200.00, I believe, and that price will probably arrive sometime before the new year. With that in mind, I think Facebook stock could be one of the better investment opportunities around today.