Hey this is tom, and in this video i'll be covering facebook and whether facebook is an attractive investment at 324 dollars, since, as you probably heard it dropped like a stone. Now, i'm not going to be sitting here, pretending that this is a company that didn't do anything wrong. They have a lot of issues to sort out a lot of explaining to do and they better get to it. Currently, we already have two whistleblowers coming out and saying that facebook is actively not trying to police its own platform against harmful speech, hate speech and basically, all that good stuff that they're supposed to be taking care of basically keeping their eye on the wallet rather than On the moral duty that they have the fiduciary duty and it's a valid argument, i believe they have some explaining to do and they have some fixing to do.

But on the business side, here's the thing always the bottom line comes first, my videos. As you know, facebook is probably the number one location to drive traffic to any e-commerce business today and if there's any industry you want to get into right now is e-commerce, so pretty much it's a no-brainer, and if the price falls to 324 dollars, which is literally As low as we had since may right here so in five months, this is as low as we had it. It's an attractive price. It's about 30 undervalued, i'm gon na.

Do a dcf i'm going to show you what other analysts are saying, we're going to run through the financials, but you know in these videos. I try to give you the bottom line first, because i respect your time. So if the only thing you needed to know, if i think that facebook at 324 is a good investment, i think it is. But if you want to watch my analysis and you know you can grab a piece of coffee or some cake or some beer or whatever suits you and let's do this, but before we get started as always, you know, don't smash, nothing, don't click, nothing don't buy.

Nothing, let's just enjoy this together and let's also learn based on this example: how to analyze travel companies, whether it's an opportunity or perhaps a value trap in this case, not so sure. So, let's start with the price 324, and the question is, first of all what the hell is going on. So there's been a lot of bad press right now. I'll show you a few stuff.

This is a second whistleblower that just came out yesterday, basically saying that the company is not really doing a good job as far as taking care of the stuff they should be taking care of. So, according to this article that just came out literally yesterday, another whistleblower claims that facebook is basically up. They haven't been doing their job and there's a lot of juicy stuff in here i mean one example would be this little paragraph where actually i'm going to put the link below, if you guys want to check out this article, but basically a facebook communications, official tucker Bounds allegedly said: according to the whistleblower, we don't know if it's true or not, but basically it will be a flash in the pan. Some legislators will get a pc and then, in a few weeks they will move on to something else.

Meanwhile, we are printing money in the basement and we are fine. Basically, i don't know why he chose the basement as a choice of words here a little bit weird. Then again we don't know if you actually said it now, but as you can see, it's a lot of compliance issues, a lot of culture stuff that needs to be solved, but nothing really on the business side does any of this matter. As far as the business side is facebook, still not the number one cheapest most effective way to drive traffic to e-commerce, and if the answer is that they're still number one, people are going to still pay them money to drive traffic.

It's as simple as that. So we got to think like smart investors here now. Of course, i do want to point out the fact that this is really up. I mean it's not cool.

They got to solve this, it's not going to blow it up on the drug and just basically forget about it. They need to address this and changing their name or whatever i heard they're planning is not going to be enough, so you better take care of this uh zuck. Now beyond this article, let's look at the actual company now i don't want you to check this out. This is the s p 500.

In the past six months, the s p 500 did eight and a half percent eight and a half percent would be our standard. How we evaluate this company. So if facebook is over under eight and a half percent the past six months, let's see so this is the facebook performance. In fact, in the past six months they did 9.5, so 9.5 would be pretty much on par with the s p.

500. Just one percent above by the way, last three months down seven and a half percent coming back down to earth. So they slightly over perform the s p 500. But we are talking about a leader in actual edtech they're, the number one premier service provider for driving traffic to e-commerce.

Their ads are the cheapest they're, the best you may hate them. You may hate zuck their privacy issues they suck whatever, but the thing is that they are pretty much number one at what they do and still they're just one percent above the s p 500, which shows me that potentially we have an opportunity here. But i don't want to get ahead of myself, even though i already gave away my conclusion, so i want you to look at what's happening with tip ranks now. Tip ranks by the way is a website that i've been using and i've been a paying user.

For months they actually came up to me and said: hey. Why don't you have an affiliate link? I said sure i love the site. I used it before it was an affiliate there's a link below. If you want a 10 discount, you can use my link and get it.

I think it's an essential working tool. I want to show you a new thing: they added that's going to help us evaluate what's going on with facebook. So basically, this is the facebook page on temp ranks. As you can see right here, you can see that they have 421.63, that's the target price.

So if that's the target price and, as you know, 324 is the actual price right now we have about the 30 percent upside on facebook on the massive blue chip company. That's pretty much the leader, that's what it's doing 30 upside, not too shabby! Now. I don't want to rely on this aggregate data and that's why i always scroll down here. I do the selection, where i just select the five star profiles just the best and i screen them best of the best.

So these are the top line. Basically analysts. Let's go with brand theo, i went many times with him before his pride target. Right now is 440.

If we click on his profile. This is what he's been doing. 76 percent. The dude is a stud 32 percent.

This year, 76 success rate and if you look at what he's doing with facebook right now, 84 success rate with facebook, 29 average profit and his less 16 out of 19 ratings were profitable. So he knows his stuff. He started on facebook back in the low 200s. Maybe even 180 right here and he wrote it all the way up.

So this new basically knows a lot about facebook. So we have this specific guy from jeffrey brad deal. We also have the consensus so as far as tip rank goes, there's a strong consensus here that this is a good stock, definitely about 30. If we go back here by the way - and that's the thing i like about this website, we can look at what the analysts are saying about.

It screen again based on the five stars. So if we look at these all of these 10 15 analysts there's not a single one. That says they don't have an upside of at least 30 percent well. Some has 18, but mainly 43.

38, 38, 30, 40, 54, 38, 54.. So everybody's saying 30, just one guy 18., so nobody thinks that this company is undervalued, sorry offer value. In fact, it's actually everybody think that it's undervalued so again with all the issues that facebook faces and they face a lot of issues, at least from the tip racks perspective. We know that these guys know what they're talking about now.

This is the facebook page from seeking alpha another company. I really like to use the services, and what i want you to see here is this short interest short interest on this company. Right now is one percent, one percent, so literally nobody showing the company at 324 dollars really important. It means that nobody thinks that this price is actually going to come down and now, let's look at the profitability grade now 80 for software as a service company.

That's fine, nothing unique about it, but ebay, the margin of 50 and net income margin of 37 37 cents on the dollar now they're, literally printing money. This is some of the best numbers you'd find in any company. Now i don't want to get obsessed about this. Hold on a second now, if we look at the revenue growth again, they're, not a value play, because they're still growing like crazy, even though they're huge 40 this year still expected to do 26 next year, post pandemic, if pandemic actually goes up again.

This number also will go up again, but at least they'll do 26 easy. Now we're going to use this assumption in a second when we do our dcf. I do want to show you the multiples here, because the multiples are also not bad at all, so the ones i care about is evie ebitda right here, trading, 12 months 16, not expensive, also price to sale. We have eight again.

I don't think it's expensive. I know that seeking alpha is telling 177. I don't know where they're taking this from, i think 8 and 16 is not expensive. If you look at p e gap right here, we have 24.

Everything seems to be within the realm of reason: ev sales again 8.. I, like those numbers - i don't think this company is expensive at all. I don't agree with their numbers here, but they tend to actually not do so well on the sectors i noticed this before, but then again what do i know? I'm not a financial advisor. I'm just the guy on the internet with an opinion, so you got to do your own research because my opinion might be an accurate might be wrong.

My dear remix of a madman, you know the drill, and now i want you to take a look at this because in five days facebook is announcing q3 numbers this thing and for the past four quarters they beat. So the question is, do you think they'll beat here or not at this point, it's about being able to guess or guesstimate, but i want to show you this little nifty tool that we got from a tip rings. Actually, when you can go to this website traffic section, which is brand new, basically it will show you how active is the traffic for the website of the company we're looking at so to give you kind of a glimpse? A cheat code before the financials come out in about five days, so this is facebook and you can see the traffic on the website also including for this period, which is the unreported period, which is the most important part. So the unreported period here right here is everything that went on with facebook before the actual financials came out and told you what happened so, as you can see, we had a little bit of a volatility and a little bit of a drop.

How much exactly we're going to see in a second because we saw a huge drop in the share price? The question is: if the business reflects the same, or do we have a gap here so right now we started this with 11.9 billion users, that's the traffic. They had in june 21, then it went down to 11.6, went then up to 11.8 and came down to 11.2, so they lost a significant amount of users down from. I think what we have 12 here, yeah and almost 12 down from almost 12 to 11.2. It's a big loss.

However, as you can see right here, we can know exactly how big it is because we can actually see so they lost about five percent of the traffic, so on desktop it was worse, but on mobile they actually gained some, but in aggregate they lost 5.8 percent Of the traffic, so you would expect to see a 5 drop in the share price to match what we're about to see in the financials. So this is kind of a cheat code where we can actually see what's going on facebook before the financials come out. So the question is, we know this as a fact, so we have a six percent loss in the traffic. The question is how much of a drop that we have in the share price and let me go back again to the facebook shares.

So, as you can see right here, they have the one month chart right here for facebook and for the past month they lost eight percent. So we know the company lost eight percent of the share price of the past month, however, only lost about five point. Eight percent of its traffic, so we have a little bit of an arbitrage here, a little bit of a gap that can utilize. But the question is beyond that: is this a good investment in long term, because this is what i honestly care about and for this we got to do our dcf.

So this is my dcf right here, and so you know i never hide my. So everything is out in the open, let's scroll up and let's look at the assumptions, so i assumed 52 billion this year and the growth of 25 per year actually 30, which i think would be reasonable, so 30, all the way through linear, also i've assumed 28 In taxation, as of next year, so again, if it doesn't go up clean profit for facebook, but i assume 28 in tax. All the way through as of next year, also assumed 157 billion in capex, which is insane. But i want to be kind of conservative.

Also assume at 12 discount increase, because i assume that the interest price will go up so increase my discount rate, which also lowers the valuation. So, as you can see, we have a price target of 380. That's for the perpetual approach and also 488 for my ebitda. Multiple now just to let you know that this 380 is average with this one right here, so the average price is 433 dollars, which means we have about 34 upside and by the way, this 488 is based on a 10x multiple.

Just to tell you kind of the truth, it should be 25 because it's a tech company, but i did 10 just to be conservative because i wanted to keep it as low as possible. So at minimum i see here a 34 upside for this company. Then again, you might not agree with me. You might think that morally, this company is uninvestable and i get it.

For example, i want to invest in boeing, but i think that the boeing issues are structural with the engineering, with the quality of the products with them. Unable to compete with airbus, i don't think that facebook has any business structural issues. They do have a lot of nasty to fix on their culture under compliance and all that stuff, but as a service provider and driving traffic to e-commerce they're. The best and they're currently undervalued, in my opinion, let me know what you think below and a huge shout out to the channel members and the patrons for making this possible.

Thank you guys. So much i'll see you tomorrow.