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Facebook lost more than Tesla's market cap

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Re: Facebook lost more than Tesla's market cap

#11

Post by raiyu »

twblalock wrote: post #3

The stock will come back, just as Wells Fargo, United Airlines, and Intel stock came back after their scandals. Facebook in particular will come back because there is no alternative social network with nearly as many people on it. The fundamentals of the business aren't really at risk -- most of the users will stay. The impact of potential privacy-related regulation is already priced in to a large extent because ever…

It's true that many companies come back from scandal but it really depends on the impact to the bottom line. Chipotle had tremendous negative press years ago from food poisoning issues and hasn't recovered since. Even though the number of instances are in the single digits compared to millions of burritos served on a monthly basis.

With social media boycott campaigns it's hard to separate the noise from impact on the bottom line but with recent stories of Uber and what was occurring behind the scenes, the #DeleteUber campaign actually did have a negative impact on the bottomline that was felt and was definitely a huge driver for the board moving to remove Travis which is underreported as everyone instead focuses on the drama that occurred as that sells as a better story from the press side.

With Facebook it will really be about how many people truly delete Facebook.

The difference of course is that every Uber user was generating significantly more revenue on average than the avg Facebook user, so the number of users that delete Facebook would have to be much more significant.

Also interesting, is what is the global response. Is this localized to the US, are many people globally doing the same thing?

If it doesn't impact the bottom line through a massive amount of users deleting, then the stock will bounce back well before the next quarterly earnings report.

Re: Facebook lost more than Tesla's market cap

#12

Post by asteli »

twblalock wrote: post #3

The stock will come back, just as Wells Fargo, United Airlines, and Intel stock came back after their scandals. Facebook in particular will come back because there is no alternative social network with nearly as many people on it. The fundamentals of the business aren't really at risk -- most of the users will stay. The impact of potential privacy-related regulation is already priced in to a large extent because ever…

Why do we need a social network with so many people on it? What is the unique utility of Facebook? The ability to monitor and feel a vague sense of presence from the periphery of your social sphere?

It's definitely not about social fulfillment.

Re: Facebook lost more than Tesla's market cap

#13

Post by spyspy »

raiyu wrote: post #11
twblalock wrote: post #3

The stock will come back, just as Wells Fargo, United Airlines, and Intel stock came back after their scandals. Facebook in particular will come back because there is no alternative social network with nearly as many people on it. The fundamentals of the business aren't really at risk -- most of the users will stay. The impact of potential privacy-related regulation is already priced in to a large extent because ever…

It's true that many companies come back from scandal but it really depends on the impact to the bottom line. Chipotle had tremendous negative press years ago from food poisoning issues and hasn't recovered since. Even though the number of instances are in the single digits compared to millions of burritos served on a monthly basis. With social media boycott campaigns it's hard to separate the noise from impact on the…

Disclosure: I bought more FB today

You covered the fundamental reason why Facebook _could_ suffer from this but I believe it won’t. Uber is very easy to ditch because it has well-known competitors that are just or almost as good and readily available. And uber doesn’t have years of photos, friends and interactions that I’d be losing.

Re: Facebook lost more than Tesla's market cap

#14

Post by bsaul »

panarky wrote: post #8

Facebook isn't going to disappear, but the company's valuation has fast growth baked in the cake. We're already seeing dramatic deterioration in DAUs and minutes per user. This episode will cause a few users to leave Facebook completely, but many more will use it less. And that deceleration in the growth rate will need to be offset with an acceleration in earnings and cash flow for the stock price to increase from he…

Most people i've seen move away from facebook ended up in instagram and whatsapp. So i'm not worried for the stock in the long term. They do however need to prepare for the post-instragram era. Not sure what it's going to be.

Re: Facebook lost more than Tesla's market cap

#15

Post by sigstoat »

stochastic_monk wrote: post #4
twblalock wrote: post #3

The stock will come back, just as Wells Fargo, United Airlines, and Intel stock came back after their scandals. Facebook in particular will come back because there is no alternative social network with nearly as many people on it. The fundamentals of the business aren't really at risk -- most of the users will stay. The impact of potential privacy-related regulation is already priced in to a large extent because ever…

I hope this sticks. My family is quitting it, after thinking I was odd for not being on it the last few years. I don’t like being a product. Yes, Google products still make money off me, but I try to minimize it, and they’re at least slightly less callous.

> ... they’re at least slightly less callous

or at least better at not getting caught.

Re: Facebook lost more than Tesla's market cap

#16

Post by [deleted] »

ams6110 wrote: post #10
xbmcuser wrote: post #5

Earlier quoted context omitted.

Why is a social network needed. Maybe because I am mostly a loner so I don't get it. I was on Facebook for few years as more people that I knew got on it just made get off it.

I don't get it either. Email has always worked just fine for me to stay in touch with friends and family. I have a Facebook account that I set up for some service that needed it for a login. But I've never used it beyond that.

[deleted]

Re: Facebook lost more than Tesla's market cap

#17

Post by jedberg »

xbmcuser wrote: post #5
twblalock wrote: post #3

The stock will come back, just as Wells Fargo, United Airlines, and Intel stock came back after their scandals. Facebook in particular will come back because there is no alternative social network with nearly as many people on it. The fundamentals of the business aren't really at risk -- most of the users will stay. The impact of potential privacy-related regulation is already priced in to a large extent because ever…

Why is a social network needed. Maybe because I am mostly a loner so I don't get it. I was on Facebook for few years as more people that I knew got on it just made get off it.

I like Facebook to keep up with friends who I don't get to see very often. One on one communication with everyone would be untenable. The broadcast nature of Facebook (and Instagram) makes it perfect for keeping up with what my friends are doing.

For example, I literally haven't seen some of my high school friends since we graduated 22 years ago, but I know all about their kids and families and their recent successes at their jobs. I like knowing that I'm still connected to people I spent literally every free hour with in my youth.

It's especially salient for me because Facebook didn't exist when we graduated. Many of them I've only reconnected with in the last 5 to 10 years, so I remember what it was like when we didn't have Facebook to keep in touch.

It has real value for me.

Re: Facebook lost more than Tesla's market cap

#18

Post by adventured »

panarky wrote: post #8

Facebook isn't going to disappear, but the company's valuation has fast growth baked in the cake. We're already seeing dramatic deterioration in DAUs and minutes per user. This episode will cause a few users to leave Facebook completely, but many more will use it less. And that deceleration in the growth rate will need to be offset with an acceleration in earnings and cash flow for the stock price to increase from he…

> the company's valuation has fast growth baked in

That used to be the case. It's trading at a particularly unusual discount today in fact, on a growth to valuation metric. It's radically superior to Amazon on that front. It's better than Google. And it's dramatically better than Microsoft (which barely has any growth).

Facebook is trading for ~23 times likely 2018 earnings. And perhaps 17 or 18 times 2019 earnings.

Google has half the growth rate of Facebook, with a higher multiple (messy earnings statements the past year, but it's reasonably around 30 times 2018 likely earnings).

Microsoft has barely grown earnings for a decade. Their sales growth is single digits. ~30 PE ratio.

Amazon? Ha.

Netflix? Ha.

Cisco has had a contracting business for years on the top line. Profit has also declined. They're being granted a ~20-21 PE ratio on the basis of zero growth. That's barely below what Facebook is getting for considerable growth.

Or take Activision, trading for ~55-60 times earnings, with something around 1/5th the growth of Facebook.

Facebook has a PE ratio a lot closer to Oracle, which has a stagnant business that hasn't increased earnings in years.

Even pathetic Coca Cola, which has a collapsing business (years of sales declines), is trading for ~30 times earnings.

McDonald's which has a business that has been contracting for years, is trading for ~25 times earnings.

Facebook is cheap in just about every way compared to the broad market and compared to most slow-growth blue chips.

Re: Facebook lost more than Tesla's market cap

#19

Post by thisisit »

raiyu wrote: post #11
twblalock wrote: post #3

The stock will come back, just as Wells Fargo, United Airlines, and Intel stock came back after their scandals. Facebook in particular will come back because there is no alternative social network with nearly as many people on it. The fundamentals of the business aren't really at risk -- most of the users will stay. The impact of potential privacy-related regulation is already priced in to a large extent because ever…

It's true that many companies come back from scandal but it really depends on the impact to the bottom line. Chipotle had tremendous negative press years ago from food poisoning issues and hasn't recovered since. Even though the number of instances are in the single digits compared to millions of burritos served on a monthly basis. With social media boycott campaigns it's hard to separate the noise from impact on the…

The question always is - Does the Average person own the problem(or care) to actually do something about it?

Most of the examples from above - Intel, UA, Wells Fargo etc had serious issues. But the average person didn't own the problem. Today if you talk to an average person about Intel's issues they will respond - Is my laptop/pc working without issues? If yes. Then I don't care, let Intel come up with a patch.

Chipotle on the other hand was a case of customer's owning the problem. In people's mind having a burrito from Chipotle posed a health risk. Hence, the bottom line impact.

If you tell an average person, and I did try, about how Facebook sold their data and the issue with Cambridge Analytics etc, they dint seem to care. The reason is while Facebook did let CA misuse the data, it didn't really "force" people to share their data -- this is an actual quote from a non-technical user.

So, as far as an average person is concerned, the question is - will Facebook change it's structure to make it difficult to share their location, last meal etc for some likes? If not, then they don't care.

Re: Facebook lost more than Tesla's market cap

#20

Post by ams6110 »

raiyu wrote: post #11
twblalock wrote: post #3

The stock will come back, just as Wells Fargo, United Airlines, and Intel stock came back after their scandals. Facebook in particular will come back because there is no alternative social network with nearly as many people on it. The fundamentals of the business aren't really at risk -- most of the users will stay. The impact of potential privacy-related regulation is already priced in to a large extent because ever…

It's true that many companies come back from scandal but it really depends on the impact to the bottom line. Chipotle had tremendous negative press years ago from food poisoning issues and hasn't recovered since. Even though the number of instances are in the single digits compared to millions of burritos served on a monthly basis. With social media boycott campaigns it's hard to separate the noise from impact on the…

Funny thing about Chipotle, I never stopped eating there because I guess I felt that serving food not loaded with preservatives might come with a slightly higher chance of gastric disagreement. Sort of like shopping at a farmers market. The food is fresher, but you're a little less certain about safety because it hasn't been bleached, gassed, irradiated, pasteurized etc.
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