Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, social networking giant Facebook (FB +1.71%) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Facebook and see what CAPS investors are saying about the stock right now.
Facebook facts
|
Headquarters (founded) |
Menlo Park, Calif. (2004) |
|
Market Cap |
$95.4 billion |
|
Industry |
Internet software and services |
|
Trailing-12-Month Revenue |
$6.1 billion |
|
Management |
Founder/Chairman/CEO Mark Zuckerberg CFO David Ebersman |
|
Trailing-12-Month Return on Equity |
4.3% |
|
Cash/Debt |
$10.3 billion / $2.2 billion |
|
Competitors |
|
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 36% of the 1,876 members who have rated Facebook believe the stock will underperform the S&P 500 going forward.
Just yesterday, one of those bears, fellow Fool Matthew Argersinger (TMFMattyA), succinctly summed up the underperform case for our community:
Now that FB is back above its IPO price ($38), I'm compelled to go thumbs-down for the second time, mainly for two reasons:
1) At a close to $100 billion market cap, FB faces a huge technical hurdle in its ability to beat the market.
2) More importantly, I see a fundamental problem that I don't think the company can surmount. Every attempt by FB to monetize its enormous user base must undoubtedly come at the detriment of its user experience. People don't go to FB to find products and services (as they do with GOOG, YELP, AMZN, LNKD, etc.). They go their to socialize, communicate and learn about friends and family members. FB's latest push to use video adds is just another reason to longer use FB for that purpose. I think that ultimately leads to lower user growth and lower usage per user (which then leads to lower ad spending on the platform).
Until I'm convinced they can solve for #2, I'll maintain an underperform.
