#2 - Facebook (NASDAQ:META)
Facebook (NASDAQ: FB) - Of all the FAANG stocks, Facebook may be the one that would seem to offer the least likely growth opportunity. There have been privacy concern issues, for sure. But for a stock that generates over 40 cents of every dollar into free cash, it seems analysts may want to take a second look. After all, Facebook bought back $5.1 billion of their shares in the first half of 2018 and it’s likely that they’ll buy back the same amount, or more, in the second half. Anytime a company is buying back its own shares, they believe that their stock is undervalued. And with Facebook, there’s reason to believe that story is true. And a big reason for that is Instagram, which Facebook owns. According to estimates, approximately 15% of the company's advertising revenue came from Instagram, which represents about $6 billion of the company's $40.7 billion top-line number for 2017. As Instagram’s ad revenue continues to increase in 2018, one analyst projects that Instagram’s ad revenue could account for 33% of Facebook’s overall advertising revenue by 2020. Which brings us back to the free cash flow (FCF) story, and that's the real game-changer for Facebook. The stock is currently trading at approximately 26 times its free cash flow. Even without a higher share price for two years, the anticipated free cash flow would have the company trading at 19 times FCF. That would be an awfully tasty number for investors.
About Meta Platforms
Meta Platforms, Inc engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It operates in two segments, Family of Apps and Reality Labs. The Family of Apps segment offers Facebook, which enables people to share, discuss, discover, and connect with interests; Instagram, a community for sharing photos, videos, and private messages, as well as feed, stories, reels, video, live, and shops; Messenger, a messaging application for people to connect with friends, family, communities, and businesses across platforms and devices through text, audio, and video calls; and WhatsApp, a messaging application that is used by people and businesses to communicate and transact privately.
Read More - Current Price
- $484.88
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 40 Buy Ratings, 3 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $520.28 (7.3% Upside)
