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  • Writer's pictureIshfaaq Peerally


Another great day for the markets $SPX500 as well as for our portfolio (so far best day of the year). The best performers today are our $OIL stocks, Parsley Energy $PE and Concho Resources $CXO which are both up by over 3%. All the other stocks in our portfolio are in green today. Let's now talk about a new addition to the portfolio. I bought some shares of Qudian $QD . I'll make an update on this soon. I hope the stock goes down, so that I can buy more.


In 2018, I was buying Facebook $FB when the stock was crashing. It became the second largest position in my portfolio. But now it seems that Facebook is overpriced and the stock had disappointing earnings. Facebook revenues are going up but not its net income. That's because of increased G&A cost with new employees and a big fine to the FTC. What really disappointed Wall Street is the number of Daily Active Users (DAU), which increased by only 9% YoY.

There's one problem with the number of Facebook users, many of them are fake. Facebook says that 5% of their DAU are fake but in 2019, Facebook deleted over 5 billion fake accounts. We cannot know for sure how many fake users there are and Wall Street is worried about that too. Maybe the real number of users are going down.

This won't be a problem if Facebook can make more money per user. In 2018, there were more digital ads sold in the US than traditional ads. In the future, this will be worldwide and the competition for ad space on Facebook will go up, so will the price of those ads. The amount of revenues Facebook can derive per user can go up even if the company loses user and this will be enough for them to increase their profits because if you think about it, there are only two way these ads can go: Google $GOOG or Facebook $FB .

The intrinsic value for Facebook that I find is $612 billion but I need to take a big margin of safety (30%) on this company. That's because it is very risky. The stock lost over $120 billion in market value in a single day in 2018, it can happen again. There are antitrust and other lawsuits awaiting Facebook. Besides, the numbers are not growing that fast anymore. The risks are too big for me to buy Facebook at any price above $400 billion.

However, I still believe that Facebook has the potential to the largest company on Earth. If everything goes well for them, they will do great. But if they have some roadblocks, then the stock will most definitely suffer.

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