It still makes zero sense, it's pure emotion. Unless the speculation is for something far worse: a rapid plunge to negative growth (that doesn't appear likely right now).
Microsoft is growing at about 1/3 the rate of Facebook, and with the FB shares down 22% after hours (~$500b market cap), Microsoft has a real PE ratio at least 1/3 higher. The same crazy contrast exists for Google, Amazon, Netflix.
This is an emotional mis-pricing by the market, just as the drop to $150x in March was. I haven't bought after hours, but if the emotionalism continues tomorrow, it's an easy buy on further weakness.
I get it's probably a joke but in reality it's not a very good comparison. On average with a slot machine you will lose. On average with the market (index fund) you will win.
> Look if you wanna play pretend grown up slot machine at least understand what you're getting into.
I've got over a decade of experience as an accredited investor. The groundless insult with no other content to go with it is inappropriate for Hacker News and blatantly violates the site's rules. What made you so upset that you felt you needed to lash out toward a stranger on a forum?
If you want the straight-forward argument: FB is an easy value play on the reaction. Assume a continued slowdown in growth, by just the end of fiscal 2020 they're at $35 billion in profit against an AH $500b market cap = 14 forward PE ratio. You have to be willing to bet on persistent multiple compression across years, I'm going to bet the stock goes up and maintains a reasonable multiple based on their growth rate being beyond that of their peers. One of the best value plays in tech on multiple vs growth rate.
Match their multiple to Microsoft and Google, even despite having faster growth than both. Instead of a $500b market cap, in a little over two years they're at more like $900b-$1t. Or play it more conservatively, assume a fat discount vs Microsoft and Google, a 20-23 type PE ratio, then they're at a $700b-$800b market cap. That's a 40%-60% return in 30 months, on a conservative scenario.
I don’t use Facebook and greatly dislike the company but I completely agree with your analysis and think that’s a very common thought process to have. It’s a value play that has outrageous growth potential not to mention the best talent in the world, a huge pile of cash to acquire any competition, and absurdly low expenses. It’s well diversified now too with Instagram (worth over $100B and growing in ad revenue and users), WhatsApp (barely even monetized and the primary mode of communication in Europe and India), FB which wheathered the greatest political storm (simultaneous data plus Europe privacy) it’ll likely face without a dip in users in NA, and it has multiple other moonshot type plays that are likely to play out. It’s growing significantly faster than MSFT and GOOGL with comparable p/e. I can’t name a single growth stock that’s safer to invest in.
> > Look if you wanna play pretend grown up slot machine at least understand what you're getting into.
> I've got over a decade of experience as an accredited investor.
I don't agree with his tone, but you can't blame the perspective on the stock market. When it comes to most people, including professionals, investing in stock is pretty much the same as playing slot machine. Even worse, experience often just makes people blind to that.
Worst case scenario ? Well, should you be amongst the few who actually know what they're doing you should find some satisfaction today in knowing that it's quite a feat :-)
