- By Kyle Ferguson
During the second quarter, guru Daniel Loeb (Trades, Portfolio) purchased a 3,750,000 share stake in Facebook ( FB) at an average price of $115.21 per share. Since Loeb purchased the stake, Facebook's stock price has gained an estimated 10% in price.
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The intrinsic value of FB
Facebook in an online social networking service that is based in Menlo Park, California. The company's mission is to give people the power to share and make the world more open and connected. Facebook reported that it had 1.03 billion daily active users in December 2015, an increase of 17% compared to December 2014, when it had 934 million daily active users. Facebook owns Instagram, Messenger, WhatsApp, and Oculus virtual reality technology and content platform.
Facebook has a market cap of $362.17 billion, a P/E ratio of 60.83, an enterprise value of $340 billion and a P/B ratio of 7.18.
GuruFocus gives Facebook a 10 of 10 financial strength rating with no debt, and a strong Piotroski F-Score of 7 indicating a very healthy business situation. Facebook has an 8 of 10 profitability and growth rating with an operating margin of 39.59%, a net-margin of 27.18%, revenue growth of 38.80% and EPS growth of 405.30%.
During the second quarter, Baron Funds said the following of Facebook:
"Facebook , the world's largest social network, in our view is the largest beneficiary of the shift in consumer engagement to mobile. Mobile is no longer a device or an application. It has become a way of life. About four years ago, we participated in Facebook's IPO at $38 per share. As user engagement transitioned from desktop to mobile, growth slowed and the stock collapsed. We thought Facebook was a unique company with real competitive advantages and viewed mobile monetization as a question of "when" rather than "if." Market overemphasis on short-term results allowed us to build our position at an average cost of $26 per share. Facebook is currently trading at $114, or three times our initial investment.
We think Facebook will continue to grow. It is using its leadership position to offer targeted advertising capabilities at scale. The company is in the early stages of monetizing online video and Instagram, which have begun to contribute to incremental revenue growth. WhatsApp and Oculus provide additional avenues for potential growth opportunities."
Daniel Loeb (Trades, Portfolio) most likely purchased a 3,750,000-share stake in Facebook because the company is well known across the world. It continues to increase its daily active users, which is now upwards of 1 billion. The company has reported excellent financial numbers, it has no debt and it continues to expand its operations globally already owning Instagram, Messenger, WhatsApp, and Oculus, which gives the company further opportunity to expand in the future.