Description Goes Here

1. Facebook Overvalued
Harshal Patel

2. Disclaimer
• Paper is published with 3+ year time horizon mindset
• I am not long nor short Facebook stock
• I am not recommending investors short Facebook
• No illegally obtained or insider information was used for
this presentation
• All views are my own

3. Facebook Today
968 Million Daily Active Users
844 Million Daily Active Mobile users
900 Million Monthly Active Users
70% Use Daily
300 Million Monthly Active Users
75 Million Daily Active Users
Enormous Usage and Strong Mobile Focus

4. Facebook Financials
$265 Billion Market Capitalization
$2.9 Billion Annual Net Income
All data as of September 18th, 2015
Quarter Ending 2015 2014
Q4 Dec 34.03%
Q3 Sep 89.65%
Q2 Jun -9.1% 137.54%
Q1 Mar -20.25% 193.15%
Quarterly Net Income Growth

5. Basis
Purchasing a stock = purchasing portion of a business
Two questions I ask myself before buying a stock
1) Is buying this stock the best use of funds?
2) Would I let current management continue to operate the business?
“No” to either question = do not buy stock

6. Question 1
Leave current management in place?
YES!
- Stable Leadership
- No C Suite Drama (ie Twitter)
- An employer of choice for top engineers

7. Question 2
Buying this stock (portion of business) best use of funds?
No!
OR
With $265 Billion I can purchase………..
Facebook
Market Cap: $265 Billion
Kroger
Market Cap:
$36 B
BlackRock
Market Cap:
$49 B
Ford
Market Cap:
$58 B
Nordstroms
Market Cap: $14 B
John Deere
Market Cap:
$12 B
PayPal
Market Cap:
$40 B
Estee Lauder
Market Cap: $30 B
Colgate
Market Cap:
$25 B
All Of Facebook Conglomerate Of
All data as of September 18th, 2015

8. Comparison
Facebook Only Conglomerate
All data as of September 18th, 2015 - Latest Full Fiscal Year
What I own Best Social Network
(Facebook)
Best Photo Sharing Tool
(Instagram)
Best Communication Tool
(WhatsApp)
VR Play
(Oculus)
Largest Money Manager
(BlackRock)
2 Top Retailers
(Kroger, Nordstroms)
Top Tier Beauty Company
(Estee Lauder)
Mobile Payments Player
(PayPal / Braintree)
Consumer Goods Giant
(Colgate Palmolive)
Top Automotive Company
(Ford)
Agricultural Giant
(John Deere)

9. Comparison
Facebook Only Conglomerate
All data as of September 18th, 2015 - Latest Full Fiscal Year
Annual Net Income
$2.9
Billion
$13
Billion
100% YoY Growth for 2+ Years for Facebook to Match Conglomerate Net Income

10. What Would I Rather Own?
A portion of a conglomerate earning $13 B / year?
A portion of Facebook which earns $2.9 B / year?
I’ll take the conglomerate
Facebook is a great company with great products but
better investment options exist