Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Long Ideas

Can Facebook Ever Stop Growing

Facebook (NASDAQ: FB) might be the fastest growing company in the world. The company’s social media footprint, income and revenues just cannot seem to stop growing.

Between February 2016 and January 2017, one Facebook product the super-popular messaging solution WhatsApp added 200 million users, Statista data indicates. WhatsApp had one billion users in February 2016 and 1.2 billion just 11 months later.

Nor is it just WhatsApp, Facebook itself added 282 million users between first quarter 2016 and the same period in 2017, a Statista chart indicates. Facebook had 1.654 billion users at the end of first quarter 2016 and 1.936billion  a year later. If these numbers are accurate, just two Facebook products may have more than three billion users.

Facebook is making a Lot of Money

Mark Zuckerberg has built the largest and fastest growing media in history and here’s the incredible thing it’s making a lot of money. Its earnings astounding, when compared with the $2.2 billion loss that Snapchat (NYSE: SNAP) reported for first quarter 2017.

Some examples of Facebook’s astounding money-making capacity include:

  • A net income that increased by $1.31 billion during the first quarter of 2017. The income from $10.45 billion to $11.77 billion over the first three months of the year.


  • A net income that grew by $6.762 billion in 2016. Facebook started the year with $3.688 billion in net income and finished with $11.77 billion, wow.


  • Revenues that increased by $2.65 billion during the first quarter of 2017. Facebook finished last year with $27.64 billion in revenues that grew to $30.29 billion three months later.

  • A $9.71 billion increase in revenues during 2016. Facebook’s revenue came in at $17.63 billion in December 2015 and grew to $27.64 billion just 12 months later.


  • A free cash flow of $3.7847 billion on March 31, 2017.


  • A profit margin of 38.15% on March 31, 2017.


  • Assets that grew by $3.75 billion during the first quarter of 2017; rising from $64.96 billion on New Year’s Eve 2016 to $68.71 billion at the beginning of April.

  • Asset value growth of $15.55 billion over the course of 2016. Facebook began 2015 with $49.41 billion in assets and finished with $68.71 billion.


  • Cash and short term investments that increased by $2.86 billion in first quarter 2017. Facebook started 2017 with $29.45 billion in the bank that increased to $32.31 billion three months later.



  • An $11.02 billion increase in cash and short term investments during 2016. Facebook had $18.43 billion in the bank in December 2015 and $29.45 billion 12 months later.

  • A $1.58 billion increase in cash from operations during first quarter 2017. Facebook finished 2016 with $16.11 billion in cash from operations that grew to $17.69 billion three months later.


  • A $5.79 billion increase in cash from operations during 2016. Facebook reported $10.32 billion in cash from operations in December 2015 and $16.11 billion 12 months later.


All of this makes Facebook both a value investment and a growth stock. It’s even rewarding shareholders who received a return on equity of 21.56% on March 31, 2017.

There was no dividend but Zuckerberg and company certainly have the means to pay out a juicy one if they wished. They also have the ability to easily buy Snapchat if they wished. Snapchat had a market capitalization of $24.40 billion on May 15, 2017, and an enterprise value of $19.33 billion on the same day.

Facebook is a Great Value Investment

That’s another reason why Facebook is a great value investment; it has the ability to acquire a large number of valuable companies. Despite that it might be a good idea to wait for a while to buy Facebook. It seems a little over valued at $145.81 on May 19, 2017, but FB will be worth that price someday.

If you want a safe growth stock that will add a lot of value in years to come, Facebook would be a great choice. It’s a fascinating value stock, because Mark Zuckerberg has created a social media company that makes money. That’s an incredible feat in today’s world.