If you're thinking really long term in stock trading, here's something for you to hold on to for 50 years! Analyst Leo Sun at Motley Fool recommends a growth oriented stock you can hang on to for a long time.
The stock in question is Facebook ($FB). This social network is still the most widely used global social network, its monthly active users (MAUs) have actually grown to 2.23 billion in 2018 Q2 from 100 million in 2008 Q3. This growth has made it the biggest social network in the world.
Facebook Is a Huge Umbrella of Social Networks
Motley Fool's Leo Sun reckons that the sheer size of Facebook gives it the edge over social networks that are much smaller, though they may be getting more popular. And some of these other social networks are under Facebook's own umbrella - the hugely popular Instagram, WhatsApp and Messenger, all of which ensure the Facebook umbrella captures a wide section of the social network user base. It stops their existing users from leaving that umbrella too.
Messenger initially started as an extension of Facebook's chat, but it's now being expanded into an increasingly independent platform. It has the potential of succeeding as a stand-alone service, and its monthly average users (MAUs)topped 1.3 billion in September 2017. WhatsApp is a mobile number-based messaging service like Messenger, but has a no-nonsense approachto it. It has exceeded 1.5 billion MAUs. While all these platforms are great, it is Instagram that keeps Facebook in touch with younger users, having touched 1 billion MAUs this June.
Facebook Is Attractive for Advertisers
With so many platforms appealing to most sections of the user demographic, Facebook has tons of user data from its online population. That data is just what advertisers are looking for, since it helps them to create ads that target and appeal to their user base better. That's been the primary factor behind the continual growth of the Facebook umbrella. Last year its earnings soared 54%, while revenues increased 47%. But analysts and investors are expecting its earnings and revenues to grow a further 33% and 37% respectively in 2018. Considering the stock trades somewhere around 20 times forward earnings, these growth rates are massive.
While these growth rates cannot be expected to be maintained forever, Facebook will be evolving its business and it can, as a result, get more revenue per user. That evolving strategy could put it in a strong position for a long, long time. Don't leave out the fact that, with its Oculus VR headgear, Facebook also has a grip on the virtual reality market.
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