Facebook (FB) is a very efficient free cash flow engine. It transforms every $1 of profit into 30 cents of clean cash.
That said, Q2 2020 and Q3 2020 are likely to be worse than investors would expect. And also, an abrupt sell-off is likely to meet the recent rally on Facebook’s share price.
Nonetheless, the potential of Facebook is still very high. And, once Facebook gets to the latter stages of 2020, it is likely that Facebook will recover its stability. In addition, it returns to being a growth business.
Too Much Emotion, Too Few Investors Rely on Facts
Facebook is generating a large amount of limelight given its size. It is very easy to get caught up in day-to-day politics, especially in an election year.
In addition, investing is already in and of itself emotionally charged. Hence, investors don’t need to add additional layers of complexity to their investment.
Saying that, in the ad market, many analysts and companies claim some momentum, but at the moment it’s hard to say how solid competition is, even though there is some significant demand for advertisers to return.
Facebook is Still Highly Innovative
Facebook’s dominant point is that many people turn off their accounts and switch to other social media sites.
Total DAU numbers tend to increase. You should highlight that the graph above includes figures from all Facebook platforms, Instagram, WhatsApp, and Messenger.
Accordingly, even though the argument that users switch off their Facebook accounts holds some weight, users still remain highly engaged and connected within the app friends and family.
Perhaps the most puzzling part of the whole story is why investors would not be able to give it the benefit of the doubt that it will not pick up traction from its payments and trade projects.
