Apart from Mark Zuckerberg’s mom, I am probably the most optimistic person on the planet when it comes to Facebook stock (nobody advocates for their kids like Jewish mothers…).
I will get straight down to the nitty gritty. I am not an analyst. I will not overwhelm you with tons of numbers, ratios, and moving averages. Look that stuff up online, there’s plenty of quant geeks to back me up.
I cannot predict what will happen next year. Warren Buffett is positive going into 2016. Apart from drinking Coca-Cola for breakfast, I think he makes good decisions. Economy expands, stock market rises, Hooray! Economy falls off a cliff, everyone loses and nobody can afford to get food poisoning from Chipotle…(so everyone loses).
Tech kicked ass and took names in 2015. I don’t have the desire to go through every sector. There are definitely winners, but they weren’t easy to spot. I’m young and relatively computer savvy. I like to invest working with business models that I understand. I understand companies want to sell me stuff. I’m not naïve; I know LeBron James would wrap his feet in diapers if the price were right (and if those diapers were marketed in such a way that made me feel cool, I would probably pay a premium to wrap my feet in said diapers too). So if the economy hums along and things don’t get too crazy…how will people sell me stuff?
Mr. Zuckerberg is sitting on digital real estate that is the equivalent of all the blue squares in Monopoly.
Let’s get theoretical….If I was given the advertising budget for AB-Inbev (which is easy because I love Bud Light) where would I advertise? Television becomes less captivating all the time and I used to be on it (true story). TV advertising is also really expensive. I once was in a commercial for skittles and I ended up taking home about 15k for a few hours of work. I think only one of Rupert Murdoch’s ex-wives could brag about getting more money for less work. Also, when it comes to TV how do you know if someone has prerecorded a show and is fast-forwarding your expensive ad buy? What if the stuff you are trying to sell doesn’t make sense for promotional placement in a netflix show? What if the demographics of people you’re trying to reach are 13 and won’t even bother looking up from their mobile phone during a conversation at the dinner table?
I doubt anyone is stupid enough to be surprised at the growing domination of digital advertising. This is a two horse race: Google and Facebook.
Let’s get personal. Last year I was trying to sell a product for wheelchairs I invented. I had a distributor, a website, and a great idea. The only thing I needed was to get it noticed…hence advertise! I used Facebook ads and Google AdSense and the ROI I got from Facebook was better and cheaper. Facebook’s user interface was easier to use, targeted my audience better, and resulted in way more traffic to my website. The famous fund manager Peter Lynch said invest in what you know… I know Facebook was money well spent.
I don’t see Facebook’s advantage fading anytime soon. My Instagram feed is now fully monetized and I know KetelOne Vodka and Stella Artois are spending a pretty penny trying to earn my ‘like’ (no doubt trying to woo me from my beloved Bud Light).
Zuckerberg has data like Charlie Sheen has A.I.D.S. Zuckerberg has users like Bill Cosby has accusers (more every day!) Every comment, every click, and every scroll is to his benefit, which in turn benefits advertisers.
Anyways, my point is Facebook and Instagram continue to grow. Mr. Zuckerberg is sitting on some of the best properties, best user insights, and highest profit margins in the business. Google is an older dog. I don’t underestimate it, it’s been growing like crazy since 2004. Facebook went public in 2012 and it’s already kicking ass. I liked Kobe…but moving forward I’m excited to watch LeBron (if we’re going to be honest, FB is more like Steph Curry and Google is closer to Lebron).
You can’t monetize snapchat.
What I share on LinkedIn is what sorority girls tell their fathers about their college weekends…
If you aren’t a teenager you probably have never heard of YouNow but it’s not a huge threat nor easily monetized. It’s also makes me never want to have daughters.
Everything I think about Yelp was summarized perfectly on a South Park episode. Too many Yelp reviewers are pompous punks stringing small businesses by their hamstrings over how many stars they deserve. Facebook is about to unleash a competing feature and I hope Yelp is something I tell my kids about in the same sentence as Netscape.
Twitter? – A declining user base, a stupid product, and a CEO that people think is capable of running two public companies (Jack Dorsey is not Bo Jackson…).
This summer I spent a month surfing off the beaten path in Sumatra, Indonesia. Most young people there wanted two things: 1) to practice their English with me 2) to be my Facebook friend. If you’re wondering how Robi in Ujung Bocur is doing, he just posted an update about his friend’s scooter a few hours ago. I’m sure his Facebook feed is filled with pointless quizzes and kitten videos as well.
****Disclaimer: These are just my opinions and you should do your own research before making any investing decisions. Past performance does not guarantee future results. My opinion is not the gospel and use your own judgement. Investing because “so and so says it is a good idea” is not a good enough reason to put your money into something. I’ll either be proved right or wrong, but don’t drag my butt to court. Any other legal jargon I’m supposed to put at the bottom of these things applies as well….
Basically, invest at your own risk.