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Buy Facebook (FB) On Increased Social Media Use in 2018
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Markets and indexes continue to hit new highs just two weeks into 2018, with the likes of Amazon (AMZN - Free Report) and other giants experiencing substantial gains already in the New Year. Now, as investors look out at all of the possible investment opportunities for 2018, some might want to consider doubling-down on Facebook or scooping up the social media behemoth for the first time.
The instantly recognizable social media power is poised to grow on the increased ubiquity of its platforms in 2018. In fact, market research firm eMarketer noted in a recent report that social media use in the U.S. will reach new heights this year.
The firm specifically pointed to Facebook, which is a focal point of the controversy surrounding fake news and political advertising transparency, as a company that stands to benefit from increased social media usage.
In 2018, the U.S. social media user base is expected to hit 200 million, which is just 32 million shy of the entire U.S. adult television audience and would account for over 61% of the total U.S. population. Social media use will also reportedly double the total number of adult magazine readers and fall just 29 million short of the total digital video audience.
According to eMarketer, Facebook’s U.S. advertising revenues are expected to hit $21.57 billion this year. The massive figure is projected to double the amount spent on newspaper advertising and would fall just below the overall total of $23.12 billion that is set to be spent in the entire print category.
In 2016, print advertising accounted for 13.3% of total advertising spending, while Facebook alone grabbed 6.3%. This year, the disparity is expected to creep down to 10.8% and 10% in favor of print. The report goes on to state that, “In 2019 Facebook will zoom ahead, accounting for 11.3% of all U.S. ad spending, compared with 10.0% for print."
Now, as we head into a year that could see Facebook gain even more clout among citizens in the U.S. and around the world, and in turn with advertisers, let’s take a look at its current fundamentals.
Current Fundamentals
Mark Zuckerberg’s company is basically a mobile and online advertising company, with $10.14 billion, or 98%, of its $10.33 billion in total third-quarter revenues coming solely from advertising. In the company’s Q3 earnings report, it noted that mobile advertising accounted for 88% of its total ad revenue.
Facebook reported that as of the end of September its monthly active users total 2.07 billion, which marked a 16% year-over-year jump. Facebook now claims over 27% of the world population as an MAU.
Facebook is currently a Zacks Rank #2 (Buy) and sports an “A” grade for both Growth and Momentum in our Style Scores system, helping the company earn an overall “B” VGM score.
Facebook’s current cash flow growth rate rests at 109.17%, which destroys the “Internet – Services” average and should help the company further invest in new technologies such as augmented reality.
Looking ahead to the fourth-quarter, based on our current Zacks Consensus Estimates, Facebook is projected to see its revenues soar 42.62% year-over-year to hit $12.56 billion. The social media giant is expected to see its bottom-line surge by 37.59% and reach $1.94 per share.
In terms of long-term earnings growth, Facebook is expected to expand its EPS figures at an annualized rate of 26.82% over the next three to five years. This figure alone might prove enticing for investors when coupled with the fact that the use of social media, as well as its share of the advertising market, is set to keep on growing.
What’s more, Facebook has topped earnings estimates in each of the trailing nine quarters. Maybe better still is the fact that shares of Facebook sit almost 5% below their 52-week high, which means investors could grab shares at a relatively discounted price before what could be another massive climb in 2018—sparked by a potentially strong Q4.
Facebook is set to report its fourth-quarter and full-year 2017 results on Jan. 31.
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It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Buy Facebook (FB) On Increased Social Media Use in 2018
Markets and indexes continue to hit new highs just two weeks into 2018, with the likes of Amazon (AMZN - Free Report) and other giants experiencing substantial gains already in the New Year. Now, as investors look out at all of the possible investment opportunities for 2018, some might want to consider doubling-down on Facebook or scooping up the social media behemoth for the first time.
The instantly recognizable social media power is poised to grow on the increased ubiquity of its platforms in 2018. In fact, market research firm eMarketer noted in a recent report that social media use in the U.S. will reach new heights this year.
The firm specifically pointed to Facebook, which is a focal point of the controversy surrounding fake news and political advertising transparency, as a company that stands to benefit from increased social media usage.
In 2018, the U.S. social media user base is expected to hit 200 million, which is just 32 million shy of the entire U.S. adult television audience and would account for over 61% of the total U.S. population. Social media use will also reportedly double the total number of adult magazine readers and fall just 29 million short of the total digital video audience.
According to eMarketer, Facebook’s U.S. advertising revenues are expected to hit $21.57 billion this year. The massive figure is projected to double the amount spent on newspaper advertising and would fall just below the overall total of $23.12 billion that is set to be spent in the entire print category.
In 2016, print advertising accounted for 13.3% of total advertising spending, while Facebook alone grabbed 6.3%. This year, the disparity is expected to creep down to 10.8% and 10% in favor of print. The report goes on to state that, “In 2019 Facebook will zoom ahead, accounting for 11.3% of all U.S. ad spending, compared with 10.0% for print."
Now, as we head into a year that could see Facebook gain even more clout among citizens in the U.S. and around the world, and in turn with advertisers, let’s take a look at its current fundamentals.
Current Fundamentals
Mark Zuckerberg’s company is basically a mobile and online advertising company, with $10.14 billion, or 98%, of its $10.33 billion in total third-quarter revenues coming solely from advertising. In the company’s Q3 earnings report, it noted that mobile advertising accounted for 88% of its total ad revenue.
Facebook reported that as of the end of September its monthly active users total 2.07 billion, which marked a 16% year-over-year jump. Facebook now claims over 27% of the world population as an MAU.
Facebook is currently a Zacks Rank #2 (Buy) and sports an “A” grade for both Growth and Momentum in our Style Scores system, helping the company earn an overall “B” VGM score.
Facebook’s current cash flow growth rate rests at 109.17%, which destroys the “Internet – Services” average and should help the company further invest in new technologies such as augmented reality.
Looking ahead to the fourth-quarter, based on our current Zacks Consensus Estimates, Facebook is projected to see its revenues soar 42.62% year-over-year to hit $12.56 billion. The social media giant is expected to see its bottom-line surge by 37.59% and reach $1.94 per share.
In terms of long-term earnings growth, Facebook is expected to expand its EPS figures at an annualized rate of 26.82% over the next three to five years. This figure alone might prove enticing for investors when coupled with the fact that the use of social media, as well as its share of the advertising market, is set to keep on growing.
What’s more, Facebook has topped earnings estimates in each of the trailing nine quarters. Maybe better still is the fact that shares of Facebook sit almost 5% below their 52-week high, which means investors could grab shares at a relatively discounted price before what could be another massive climb in 2018—sparked by a potentially strong Q4.
Facebook is set to report its fourth-quarter and full-year 2017 results on Jan. 31.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>