Sunday, 21 August 2016

Facebook thumbs up

It has been a historic turnaround for Facebook since their IPO. Barron's sums up the sentiment perfectly with a thumbs down in 2012 in contrast to a thumbs up released this weekend (August 2016). Technology is an easy area to get wrong and Facebook traded on the perception that mobile was a risk to the business but now four years later 84% of advertising revenue is from a mobile device. Mobile generated $5.24 billion in the last quarter alone and its driving the business as users spend more time on Facebook. At the time of the 2012 article Facebook was expected to earn nearly $1.36 a share in 2016 instead analysts are expecting nearly $4 a share. Perception vs reality is the key to the market where different views can lead to large rewards if proven correct. We attempt to find these differences but like everyone else we get things wrong and can be influenced by the media. Facts and opinions are very different things. Barron's price target has increased from $15 to $149 let's hope that Barron's has it right this time.

                                       2012                                                2016

Decisive has a long position in Facebook. The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.