Release equity and buy facebook shares

I write to discuss Facebook shares on NASDAQ. It is my opinion that the shares will double in price in the next 1 to 2 years. It is currently trading around $80 a share. At the moment many analysts in the States predict the share price in the short term to be around $105. I'm thinking of taking out a couple of hundred grand in equity and taking a risk....

Here are some comments from brokerage firms in New York:

-The key to the Facebook story continues to be its ability to succeed on the mobile platform, where significant ad dollar growth is likely to occur for multiple years.

-Facebook?s video consumption growth remains explosive as it evolves into a premier digital mobile video platform, reaching 4 billion video views/day in 1Q15 (75% on mobile) vs. 3 billion in 12/14 and 1 billion in 9/14.

-While clearly a more loved stock by global investors in 2015 vs. 2014, Facebook?s continued execution, early stage in monetization of time spent and leadership position in mobile shouldn?t be treated with complacency. Going forward, we look to (the second half of 2015) and 2016 as catalysts for product innovation and monetization as Facebook broadly deploys solutions in video, messaging, eCommerce and ad tech.?

-While there was not much quantitative detail in terms of 1Q15 results regarding video ads, we still think video ads and gradually higher ad load rates on the core Facebook news feed and overall Instagram ads with higher penetration with large brand advertisers will be key incremental revenue growth drivers this year and into 2016.?

-Facebook remains one of our Top Long Recommendations in the Large Cap Net sector. Facebooks?s Q1 P&L and Metrics results were intrinsically very strong. We see the company correctly ramping up investments ? from a position of strength ? in many promising, high-growth areas (e.g. video ? now at 4 billion daily video views vs. 1 billion in Q3). And those high-growth areas represent four greenfield revenue opportunities (Instagram Monetization, Auto-Play Video Ads, FAN & WhatsApp) that can contribute well over $2 billion in incremental revenue in 2015.?


An analysis by Morgan Stanley recently suggests: ??FB is on a trajectory to surpass Google as the biggest winner of incremental ad dollars??:

http://finance.yahoo.com/news/looks-facebook-could-soon-pass-171923895.html

Another thing to consider is that if FB is allowed to operate in China in the future I believe there will be a massive surge in the stock price. Its only a matter of time when this will happen.

Management in FB are evidently very strategic when it comes to increasing its MAU (monthly active users)?.

http://www.zdnet.com/article/who-re...ree-internet-plan-for-africa/#ftag=YHFb1d24ec

To sum up?. Here is a stock comparison between Google and FB:

http://www.nasdaq.com/symbol/goog/stock-comparison

Google is priced at $533 a share (this is after a stock split a few yrs ago). FB is currently priced around $80. Its anyone?s guess what the price of FB will be in 2 or even 5 years time. Investing on the stock market does have its risks. However, FB?s debt levels are extremely low and their revenues are exploding year by yr. Even if the market crashes, the company is financially strong and has in excess of 1 Billion MAU's (and growing everyday). They are also close to releasing their virtual reality software and they are about to roll out the search functions which could directly compete with Google. Read this article entitled

''Facebook?s New In-App Search Could Be a Google Nightmare'':

http://www.wired.com/2015/05/facebook-add-a-link-search/


Facebook has much more ad space on its social network ? and higher engagement. Facebook is now the second largest online ad seller globally, trailing only search giant Google Inc. (GOOG).
Facebook?s revenues are growing swiftly as ad load rises and more advertisers ramp up their digital efforts to target the new age users. Analysts polled by Bloomberg expect the company?s annual revenues to rise to $29 billion by fiscal 2017, up from $12.4 billion in fiscal 2014.
 
Facebook may be a good buy but I wouldn't do it on the basis of their advertising potential. I used to manage a lot of PPC advertising and their capabilities compared to Adwords are a joke, and I had very little success. Ultimately when people go to shop, they hit Google. As someone on the front lines, I'm very wary of listening to analysts. I'd talk to the people actually trying to make money from it. Ad revenue will go up as people chase it, then it'll come crashing down when people find there's no ROI. I put in tens of thousands into Adwords without even blinking an eye. I would not do the same with FB. ROI on Google can be tremendous. What advertising company can you think of that has hundreds of thousands of advertisers willing to **HAPPILY** throw cash at them like Google? Adwords is a beast and is hard to beat. Until I see the same from FB I would only invest based on something - anything - other than ad rev.
 
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Sounds like a big gamble, unless you are well informed.
Your talking about a couple hundred k.
Unless this is just play money for you, I'd suggest getting in touch with many professionals in the industry to get their view on trends, competition in the market, upcoming plans, possible risks, known and unknown, etc, etc.
Don't just rely on media reports and stories, they hold no weight.
You need to speak with those who are in the game everyday and know exactly what's coming up.
Even when you analyse the known data, there is still the unknown events which is what you have to weight up as the risk vs reward equation.
 
I wouldn't buy shares because I don't feel their advertising potential has much of a future ... as a user I ignore all paid ads and simply scroll thru until I find what I'm interested in - what my family and friends (and businesses I've liked) are up to.
 
That sounds like gambling to me!
That's not what share investing is about IMO - see the many excellent share investing threads we have here on Somersoft.
If you want to gamble, it's fine, go ahead, but realise you are gambling your capital and it might go either way.
 
That sounds like gambling to me!
That's not what share investing is about IMO - see the many excellent share investing threads we have here on Somersoft.
If you want to gamble, it's fine, go ahead, but realise you are gambling your capital and it might go either way.

+1.

You should just take your money to the casino and put it all on red for a single spin of the roulette wheel. At least it will be over quickly.
 
what proportion of your net worth will this punt be?
if it's a trivial proportion to you then sure, why not. If you're all in and betting the farm and will be wiped out if you're wrong about this bet then I would proceed with extreme caution.
 
Some of the responses are interesting ( a few!)...

I think 'gambling' is a bit strong a word to use in this example where Ive analysed several years financials and done more research on this company than your average aussie battler. Mark Z (CEO of FBook) is a genius on par with Steve jobs and evidently has some of the finest IT brains working at his company. I believe they have the strategies and plans in place to take the company into areas not imagined by most folk... AND they have the funds to achieve it.

Right now a lot of people have bought and sold call options for next January in the $90 to $100 range, so a lot of people seem to think that's a good bet in the next six months. There's a lot of optimism out there on the stock.

I believe that FB could be one of those stocks that people in the future wished that they owned...
 
So you could use the money to pay facebook shares or five times the amount of property.
Do you think the shares' capital gains will be five times that of property?

Obviously there are some advantages in shares, however due to the leverage and inherent value, I much prefer property.
 
So you could use the money to pay facebook shares or five times the amount of property.
Do you think the shares' capital gains will be five times that of property?

Obviously there are some advantages in shares, however due to the leverage and inherent value, I much prefer property.

Firstly, what Donkey is talking about doing is ridiculous, BUT ;

If he really believes the stock will double in 2 years, he can apply leverage in the form of options. He could also buy the options on margin for even more firepower...now we are cooking with gas ! :)

Leverage is a available in any asset class and works well when it works......there is a lot of "I love property because I can lever right up!" On SS. Just understand its a coin with 2 sides.
 
So you could use the money to pay facebook shares or five times the amount of property.
Do you think the shares' capital gains will be five times that of property?

Obviously there are some advantages in shares, however due to the leverage and inherent value, I much prefer property.

Unless he's hit his serviceability limit and this is all he had left, which is just not enough for even a cheap apartment.
 
Have you factored in currency risk? You're talking about borrowing in AUD and converting it to USD to invest. The AUD is quite weak at the moment. It may not look like improving in the immediate future, if it does, you'd need to make up this difference.

This transaction doesn't just involve the price of the shares, but there's also currency exchanges to think of.
 
Firstly, what Donkey is talking about doing is ridiculous, BUT ;

If he really believes the stock will double in 2 years, he can apply leverage in the form of options. He could also buy the options on margin for even more firepower...now we are cooking with gas ! :)

Leverage is a available in any asset class and works well when it works......there is a lot of "I love property because I can lever right up!" On SS. Just understand its a coin with 2 sides.

Maybe falcon can explain why he thinks its such a 'rediculous' idea.

My IP is not in sydney and thus not in a high growth area. I believe that I can make substantial gains on this stock. I have no intention of buying into an overheated syd property market whose bubble is about to burst
 
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