Thursday, March 22, 2018

Facebook Stock - Is It A Buy?



I don't own any Facebook stock. A few years ago when it was trading at $60 a portfolio manager was singing it's praises on the nightly business news. As usual I don't listen to the TV talking heads so I had no interest in buying the stock. Looking back it might have been worth a punt.

Currenty FB is trading at around $155 down from a 52 week high of $195.

The other main reason I don't own FB is it doesn't pay a dividend and you have to pay up for all that growth at 33X forward earnings. If I was a betting man I would say with the recent controversy surrounding it's data breach, that user numbers will now stall out and restrictions and regulations will become a new norm. That is probably a good thing.

I have no idea what the future holds but as a growth story I think FB has peaked and along with revenue from ads.

The irony for me is that I closed my FB account back in December well before Christmas. I just got tired of the endless pissing contests and as a blogger have never seen any conversions from the content I posted there. I just use my blog and post to my Google+ profile. That's it. Goodbye FB!


Is It a Buy Here?

I don't buy any individual US stocks period. If I did I would use the 'Dogs of the Dow' list. It holds dividend payers with the highest yielders trading at the lowest price.

This is how I like to buy individual stocks.

FB has a ROE of 23 which is great. A profit margin of 43%, no debt and just prints cash like crazy. It also sports a beta of less than 1, which is also a major positive. 

I still wouldn't buy FB even if I wanted to until the latest news is cleared up and they have gained back user trust and implemented new protocols to screen trolls, criminals and fraudsters from breaching the data banks of all who use their platform.

At the present time I don't trust FB or Zuckerberg. I don't have an account, I don't need one or want one. I would never buy the stock unless they instituted a dividend and even then I doubt it makes my buy list.

I purchase Canadian dividend growers so I can enjoy the dividend tax credit which I don't get with US stocks.


I also believe as a growth stock, you can stick a fork in this pig. It's done!


What Happened?

Lost trust is what happened. Investors are punishing the stock because they no longer trust what the company stands for and also believes that the growth of it's user base and ad revenue is over.

We have reached peak FaceBook in other words. When it comes to investing in individual companies, you can have a great company but a lousy stock. In the case of FB I believe the tables have turned. This will slowly turn into a lousy company because they simply don't trust FB. I know I don't. I haven't for awhile.

I have hated all those ads that appear on your newsfeed just because you liked a post or joined a group.

The CEO has vowed to do better. To protect the FB platform from abuse. That's a huge job but he is a smart guy and an outstanding engineer so maybe he pulls this off. Time will tell.

I wouldn't own FB stock and if I had an account, I'd close it. My opinion but I can't stand when big companies with 2 Billion users/customers using their service act so smug with nothing but lip service in response.

I also think this stock will move sideways to down in the coming weeks. I would hold off on buying as you may get it cheaper. Right now it's still a go to stock for advertisers. This is what ultimately saves this company as there is nowhere else to go for a lot of advertisers.

They have been hiding the breach of user data for a long time. I have no facts that they are, just judging. Sometimes, that's just what I do.

The fallout continues...

Now trading @ $159

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