Facebook: Platform Business Out of Favor for the Wrong Reasons

Joe Magyer of Lakehouse Capital presented his in-depth investment thesis on Facebook (US: FB) at Best Ideas 2019.

Thesis summary:

Facebook may seem to be on the ropes given the bad press it has received. However, the user base and revenue are growing at very healthy rates. The business also owns three other fast-growing platforms — Instagram, WhatsApp, and Messenger — that each have more than one billion monthly active users and are at earlier stages of monetization.

The business is highly cash generative and has more than 9% of its market capitalization in net cash, affording downside protection and strategic optionality, and the shares are deeply our of favor at around 37% below recent highs.

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About the instructor:

Joe Magyer is the Chief Investment Officer of Lakehouse Capital. He’s also the Portfolio Manager of the Lakehouse Small Companies Fund, and the Lakehouse Global Growth Fund. He previously served as Director of Research at The Motley Fool Australia as well as the Portfolio Manager of Australia’s Motley Fool Pro. Before making the leap to Australia, Joe served as the Lead Advisor of Motley Fool Inside Value, which was recognised by The Wall Street Journal and Hulbert Financial Digest for outstanding performance. Joe is also known for his columns for the Australian Financial Review and regular appearances on the likes of CNBC and Sky News Business. Joe holds a Bachelor of Business Administration from the University of Georgia and a Master of Science in Finance from Georgia State University. He is a CFA charterholder.