After finally having some real earnings growth numbers facebook has started down the road to showing the world that it can be the big winning stock of this decade. It is not just another website or social media fad, it is a whole new form of communication that is changing the world each day.It is more like a newly invented utility than just another site on the web. It’s acceptance and use across the world is unbelievable in scope.
The debate rages form on the negative side on whether its earnings and revenue growth can appease Wall Street, then the bullish side that wonders if they have even begun to monetize their traffic flow.The potential for advertising through facebook dwarfs television and radio. One billion+ users and hundreds of billions of daily users at any one time is greater than anything the world has ever known. It is like a World Cup or Super Bowl every day.
Here are the ten reasons I believe it is highly probable that Facebook will turn into a monster stock.
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I believe Facebook is more than just a web site or a social networking tool it is a new form of communication in the same line as the telegraph, radio, telephone, television, etc. We know how well those mediums were monetized eventually. Facebook is still in the stage of exploring the best ways to turn their users into advertising income. They are not at the end of this cycle, they are at the beginning.
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Facebook is the winner of the social media website wars. MySpace and Friendster lost, Facebook is not a first mover into this space they are the winner.In fact Facebook is the winner of the whole internet/online battle, they are the #1 website in the world and users average 35 minutes a day on the site according to Alexa ratings.
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Facebook’s advertising model is much like Google’s Adsense with linking advertisement to people’s interests, only facebook has far more information on specific customers than Google could ever dream of. Facebook can target exactly the customers that a business is looking for and put the ads in front of people that would really use it. Facebook advertising is like a precise laser cutting a leaf off a tree while other media advertising is like a bazooka shooting into a forest.
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I do not think the fear should be on Facebook worrying about someone beating them by innovating, I instead believe that others should worry about Facebook integrating and beating its competition. Google failed miserably with Google+ but Facebook could succeed with an integrated search engine in their site.
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People think Twitter is Facebook’s competition but I believe they are two different genre’s. Facebook is about people that know each other connecting, also like minded people seem to connect even though that is not what was suppose to happen, Twitter is about the sharing and finding information, and also conversations with the world through topic tags. I use and love both mediums and see the benefit in both.
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Mark Zuckerberg has been on a near perfect winning streak since 2004 why bet against him? The odds are not in our favor. He is on the path to standing along side Steve Jobs and Bill Gates for innovation and conquering a space by beating all competitors.
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If Zuckerberg can start from scratch in his dorm room on a shoestring budget and create one of the most visited websites in the world what can he do with one of the top web sites in the world and billions in cash? Lots of upside potential here.
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Zuckerberg is very pragmatic and has played one game up to this point, now that he is running a public company he will play the new game of earnings expectations.
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This is not a bubble stock, this company creates billions in earnings, its stock price will be set based on its potential for growth.
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Facebook has created an impregnable hedge with its +1 billion users, it is no easy feat to try to get over 1 billion people to move to a new site. We know this becasue Google all ready tried with all its brand power, technology, and money behind it and failed miserably by all measurements.
With all this said I believe the potential is all there for one of those life changing monster stocks that only come around about every ten years. While I will be trading the chart and trend not my opinions and I will cut my losses if I am proven wrong. I will be trading Facebook using the liquid weekly call options as it trends and not just buy and holding it. This gap and go has given me reason to finally start playing Facebook again with call options over the past week after the break out. We finally have a gap break out after earnings above the tough resistance level of $32.50 AND the $38 IPO price was taken out quickly, next target the all time high of $45, then it is all blue skies from there.
46% Annual earnings per share growth. Last Quarter EPS +58% Last Quarter Sales +53% This is the FIRST quarter with earnings increasing more than +15% as a publicly traded company, monetizing users is just now really getting started.
