15x what? Pre Virus guesses?
I also think it is cheap but we should forecast a couple yrs out imo.
I think the past month has demonstrated that Facebook is an absolutely irreplaceable utility for most first world citizens. Honestly, imagine somebody who makes $40,000 a year, and try estimating their consumer surplus from Facebook use. If you could enforce an agreement for them not to use the Facebook family of products for one year, what do you think is the minimum amount of money they'd demand? I think this number is easily in the thousands.
I've been a long-time Apple owner (though off and on) since 2012, and I recently realized that at roughly the same valuation, Facebook is easily the better buy. Again, similar thought experiment. Imagine telling a dual iPhone/Facebook user that they could choose: Either an iPhone but no FB products, or a Samsung Galaxy with FB. What do you think that split is like in America? I'd guess 10 to 1. One of these companies is monetizing at pretty close to their customers willingness-to-pay, and the other is capturing maybe 10% of the surplus via advertising. Whose long-term prospects excite you more?
A few years ago, in this thread, I was skeptical of Facebook's monetization; the ads I saw were all cash-burning startups and I was convinced that too much of the ad inventory was being irrationally purchased with hot money. This may turn out to be true--CPM is certain to go down. On the other hand, impressions are going to go up enormously. Of course, this is sort of the worst time for more impressions, narrowly speaking--they're not likely to price super well. But those impressions are not a one-time bounce, in my view. Sure, when the economy/health situation normalizes, people will not be loading up Facebook quite as much. But I suspect their base utilization will be higher.
Facebook is strategically digging its way down to the base layers of Maslow's hierarchy. They are very deliberately making themselves -the- source for COVID-19 information; not just globally/nationally, but more important locally. If you want to know what is happening in your particular hood of BFE, Facebook is the only way to get it. MSNBC isn't going to tell you what's going on in northern Wyoming. When things get back to normal, the average users idea of what Facebook is for is going to broaden--that breadth will create new opportunities for more product extensions and monetization potential.
But what if things don't normalize soon enough? Well, the longer and worse this crisis is, the better for Facebook. It'll give them even more time to validate their platform as the go-to source for anything important, the go-to source for connecting with family and friends and broadly sharing information/news. And unlike many other companies, they have no debt and ample cash--they can ride out an advertising recession for -years-. In the most nightmarish scenario (>1% of the entire population dying), certain aspects of high-stakes real-life socialization that we take for granted will simply have to be replaced. There will not be sufficient processing capacity for funerals/memorials, and even if there were, it simply will not be safe to do them in the normal way. As morbid as it is, these will be massive opportunities to create products that "shift" these incredibly important personal experiences to the internet.
Finally, you'd better believe the regulatory heat is gone now. There are simply bigger issues in society than litigating this stupid culture war battle and trying to figure out if Facebook is helping the libs or the MAGAs. Facebook is behaving in a way that will retrospectively validate their existence. They will be correctly perceived as an asset to the state, and probably treated more appropriately going forward.
15x is a bargain. As is 20x. If you came from the future and told me that 10 years from now Facebook was monetizing US/Canadian users at $300/year, I wouldn't flinch. There are just an overwhelming number of ways that number could double, but fewer and fewer plausible ways for me to imagine that number getting cut in half.
We'll see in a few quarters how right or wrong this is.
Very sound thinking.
Although I like FB a lot, I've been seeing a lot of other apps like Zoom, Houseparty, Tik Tok and others getting prime time recently.
I know I am talking about different things here, but this "stay at home" period will lead to the discovery of new apps and new ways to talk with friends and family. It's so easy to just download another app and start talking. I know that when it comes to messaging or social peacocking, people will go to WhatsApp or Instagram, but why is Facebook even allowing for these apps to gain ground when it could be the default video conversation tool for everyone? Why does it only allow 4 people at a time? (I know, more than 4 is a mess... why would anyone want to speak to more than 4 people online?) It just seems the company moves soooo slooowww.
And by the way, the regulatory thing and the premise that smaller players won't be able to compete, what will the definition of social platform or social media be? Is a videogame a social platform? People gather and chat over there. Is CornerofBerkshireandFairfax a social platform? Is Discord App a social platform? I think the boundaries of software are starting to get too diffuse. I'm not sure how to think about it though.
