Gå frakoblet med Player FM -appen!
014 Measuring Facebook's Growth Potential from a conservative standpoint - Stock Picking Insights
Manage episode 292872388 series 2927024
Written Post: http://stockpickinginsights.com/facebooks-growth-potential/
00:00 Intro
00:14 Facebook's ad engine
02:00 Where does Facebook's growth in revenue come from?
02:36 First branch: Growth from users
04:43 MAU and Total Addressable Market
07:50 Inflation and user spending
08:40 Second branch: Facebook's growth from relevance
11:37 Third branch: Advertisers
14:41 Forecasting Facebook's growth
15:13 1. How many new users do you expect?
18:07 2. How much market share will Facebook grab from offline advertising?
20:45 3. What multiple will the business be worth in 10 years?
21:47 4. How much does ad relevance contribute to Facebook's growth?
23:20 Conclusion
This is my attempt at forecasting Facebook's growth in the next 10 years, and therefore it is a quantitative analysis. If you'd like to check the qualitative analysis, click here.
All of the factors above excluding the 4th result in Facebook's top line doubling in 10 years, a 7.2% CAGR. If we assume ad relevance will contribute to 10% of the growth, it becomes a 8% CAGR. I also don't see net margins contracting, so I expect this 8% CAGR to bleed down to Net Income and consequently stock price (capital gains). This growth is net of inflation, due to the business model being spending friendly as explained before.
But considering that EV/NI will contract at a -2% CAGR over 10 years (31x to 25x), it leaves us at a 5-6% pretax CAGR at the current price of 320$/share.
There's a ton of talk about AR/VR, and also a lot of investment. I value it at 0 for now and focus on the core. The same goes for payment revenues. We get those two for free.
Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1
Website: http://stockpickinginsights.com/
Facebook: https://fb.com/stockpickinginsights
Twitter: https://twitter.com/stockpinsights
Instagram: https://www.instagram.com/stockpickinginsights
--- Send in a voice message: https://podcasters.spotify.com/pod/show/stock-picking-insights/message36 episoder
014 Measuring Facebook's Growth Potential from a conservative standpoint - Stock Picking Insights
Stock Picking Insights | Conservative Investing | Audio Support for stockpickinginsights.com
Manage episode 292872388 series 2927024
Written Post: http://stockpickinginsights.com/facebooks-growth-potential/
00:00 Intro
00:14 Facebook's ad engine
02:00 Where does Facebook's growth in revenue come from?
02:36 First branch: Growth from users
04:43 MAU and Total Addressable Market
07:50 Inflation and user spending
08:40 Second branch: Facebook's growth from relevance
11:37 Third branch: Advertisers
14:41 Forecasting Facebook's growth
15:13 1. How many new users do you expect?
18:07 2. How much market share will Facebook grab from offline advertising?
20:45 3. What multiple will the business be worth in 10 years?
21:47 4. How much does ad relevance contribute to Facebook's growth?
23:20 Conclusion
This is my attempt at forecasting Facebook's growth in the next 10 years, and therefore it is a quantitative analysis. If you'd like to check the qualitative analysis, click here.
All of the factors above excluding the 4th result in Facebook's top line doubling in 10 years, a 7.2% CAGR. If we assume ad relevance will contribute to 10% of the growth, it becomes a 8% CAGR. I also don't see net margins contracting, so I expect this 8% CAGR to bleed down to Net Income and consequently stock price (capital gains). This growth is net of inflation, due to the business model being spending friendly as explained before.
But considering that EV/NI will contract at a -2% CAGR over 10 years (31x to 25x), it leaves us at a 5-6% pretax CAGR at the current price of 320$/share.
There's a ton of talk about AR/VR, and also a lot of investment. I value it at 0 for now and focus on the core. The same goes for payment revenues. We get those two for free.
Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1
Website: http://stockpickinginsights.com/
Facebook: https://fb.com/stockpickinginsights
Twitter: https://twitter.com/stockpinsights
Instagram: https://www.instagram.com/stockpickinginsights
--- Send in a voice message: https://podcasters.spotify.com/pod/show/stock-picking-insights/message36 episoder
Alle episoder
×1 036 Investing in Timber vs Buying Pulp Stocks - European Stocks - Portuguese Stock Picks 12:18
1 035 Altri Production Costs Overview - European Stocks - Portuguese Stock Picks 9:49
1 034 Inditex Shipping and Returns Analysis - Inditex Stock Analysis - European Stocks 19:18
1 033 Inditex Store Profitability per store, per m² - Inditex Stock Analysis - European Stocks 8:04
1 032 Inditex Expansion of Physical Stores - Conservative, concentrated stock picking podcast 9:36
1 031 Investing is a zero sum, selfish game - Conservative, concentrated stock picking podcast 5:10
1 030 Mcdonald’s expansion potential - Conservative, concentrated stock picking - Insights Podcast 11:41
1 029 Stock Analysis Checklist: Updated Version - Concentrated Stock Picker - Stock picking Insights 4:36
1 028 Shareholder Focused Companies? No, thanks - Podcast and articles for long-term stock pickers 16:03
1 027 Bitcoin Disruption in Financial Services - Investing Podcast for Stock Pickers 26:44
1 026 The Impact of Dividend in Total Returns - Stock Picking Insights - Investing Podcast and Written Articles 10:52
1 025 S&P 500 Historical Returns with Dividends - Stock Picking Insights - Conservative Investing 10:12
1 024 S&P 500 Rolling Returns 10, 20 and 40 years - Stock Picking Insights - Conservative Investing 9:06
1 023 Return on Capital Formula Conservative Approach - Stock Picking Insights -Conservative Investing 11:51
1 022 DCF Alternative Reinvested Capital - DCF Model vs Reinvested Capital Model - Stock Picking 16:14
Velkommen til Player FM!
Player FM scanner netter for høykvalitets podcaster som du kan nyte nå. Det er den beste podcastappen og fungerer på Android, iPhone og internett. Registrer deg for å synkronisere abonnement på flere enheter.