The document proposes investing in Salesforce and Facebook based on an analysis of their financials and the US economy. It summarizes that Salesforce is a leader in customer relationship management software while Facebook dominates social networking. Both companies have strong growth predictions and financial statements. An investment of $50,000 is recommended, allocating funds between the two companies under conservative, growth, and "what if" scenarios to maximize returns over five years as the US economy and technology sector continue expanding.
When looking for a loan or venture capital to invest in a new or existing business, it is essential to develop a high quality proposal. Developing a good proposal requires (1) Plenty of advance planning (2) A detailed understanding of your business (3) Some accounting knowledge (4) Focus (5) Writing ability.
Every investment proposal is different, because every investment is unique. However, a successful investment proposal must focus on and answer three basic questions for the investor: (1) Is my investment safe? (2) When will I get back my initial investment and profits? (3) How much money will I make?
This guide will provide you with an outline of a high quality Business Investment Proposal.
Example of Fund Raising Presentation to InvestorsJeremiah Josey
This is a real example of a presentation for fund raising for Pozilok - a company I founded in 2003. Over AUD1,000,000 was raised in Australia using such presenations - a difficult feat in an environment where investment for start-up companies is very thin indeed.
When looking for a loan or venture capital to invest in a new or existing business, it is essential to develop a high quality proposal. Developing a good proposal requires (1) Plenty of advance planning (2) A detailed understanding of your business (3) Some accounting knowledge (4) Focus (5) Writing ability.
Every investment proposal is different, because every investment is unique. However, a successful investment proposal must focus on and answer three basic questions for the investor: (1) Is my investment safe? (2) When will I get back my initial investment and profits? (3) How much money will I make?
This guide will provide you with an outline of a high quality Business Investment Proposal.
Example of Fund Raising Presentation to InvestorsJeremiah Josey
This is a real example of a presentation for fund raising for Pozilok - a company I founded in 2003. Over AUD1,000,000 was raised in Australia using such presenations - a difficult feat in an environment where investment for start-up companies is very thin indeed.
A presentation by Andreas Schulze of Marsa Corporate finance to the DayOne Accelerator discussing valuation of early stage companies.
If you would like a copy for download, please contact andreas.schulze@marsaco.com
As Associate Principal at The Monitor Group (now Monitor Deloitte) in China, part of my of my role was helping train 1st Year consultants. This is the summary presentation from a day long Masterclass in the commonly used techniques in assessing a firm's "true" value.
CHARTERED INVESTOR PROGRAM:
The Chartered Investor designation is the official designation for analysts and associates in investment banking and private equity. The CI Institute tests candidates on financial modeling and valuation at three levels and provides the designation after all levels are passed and a certain amount of experience is gained in investment banking or private equity.
WHY THE CHARTERED INVESTOR PROGRAM?
Bulge bracket investment banks and leading private equity firms recognize the Chartered Investor designation.
BECOME A CHARTERHOLDER
Earning the CI charter demonstrates you have the knowledge, skills, and experience needed for investment banking and private equity in today's dynamic global markets.
COURSE OF STUDY
The CI Program course of study includes the Candidate Body of Knowledge, the curriculum content, learning outcome statements, and the topic area weights.
ABOUT THE EXAM
The CI Program includes a series of three exams; Levels I, II, and III. The exams: Are offered annually at test centers around the world on the first Saturday in June. The Level I exam is also offered in December.
Planning a Start-up? Our private equity investment PowerPoint presentation slide is just what you need. These equity-based crowdfunding PPT templates will fill the gap between the investors and your company. Download from here: https://www.slideteam.net/private-equity-investment-deck-powerpoint-presentation-slides.html
Apohan is a start-up into consulting services for success-based strategic transactions to SMEs through disruptive, cost-effective, scalable, first-in-the-world, emerging-technology-enabled EquityTech platform.
This video tells the all the strategic financial concepts, especially concepts related to business funding & within that concepts related to equity funding from the perspective of a businessperson or a top management executive. The presentation removes of all the misconceptions of businesspersons regarding equity funding, tells its advantages & disadvantages, compares it with the other options. It goes in details of why most equity funding attempts fails & what can be done to bring about success.
Aren’t you able to mobilize funds for the growth of your company? Is your business stagnated only for money? Do you need funds for a financial turnaround? Do you need to plan your succession? Do you have an aspiration or problem or confusion about your business strategy?
Apohan is an equity funding / strategic corporate transactions / M&A advisory company. We aim to achieve the highest possible valuation as well as best possible contractual terms for our clients within a minimum timespan. We aren’t a broker, an investment bank, or a statutory compliance firm but an all-domain, end-to-end, and custom strategic services implementation company. We do only sell-side (business-side) advisory. We assist the medium & mid-size businesses in India in equity funding, corporate restructuring, financial restructuring & strategic management. Equity funding is our flagship service with transaction size between INR 10Cr to INR 500 Cr for the client companies in the annual turnover range of INR 25 Cr to 250 Cr. We provide success based, time-based as well as objective based services.
Our value proposition:
Our scope of work includes making a prospective client aware of the aspects of equity/strategic transactions, removing their misconceptions, and educating them on the complex process. SMEs don’t have a professional BOD, dedicated departments for business strategy, corporate management, financial strategy, contract strategy, transaction management, etc and they also don’t know how to identify right consultants, their scope of work, and deliverables. We carry out end-to-end scope including deal/transaction structure, investment requirement schedule, on-boarding investors, study of operational documents, preparation of transaction documentation, valuation, negotiations, due diligence assistance, investment contract, deal closure & handholding. We provide all expertise from a single company: finance, secretarial matters, business strategy, contracts, investment, etc. We also understand projects, engineering, operations, marketing & other aspects of business to the extent needed for a transaction. All this leads to a very high success rate.
Follow us on linked to understand more: Apohan LinkedIn Page and Presentation on Business Funding Strategy & Options for SMEs
Our client selection:
We just don’t select any business to provide our services. We carry out the following 4-step process:
Technical 1: The soundness of a business in terms of market, operations, profitability, management quality, corporate matters, etc.
Marketing 1: The ability & preparedness of a business to carry out a transaction in terms of timeline, budget, availability of documents, clarity of objectives, etc.
Technical 2: The reasonability & rationality of the offer to be made to an investor in terms of expected valuation & terms of contract.
Marketing 2: The terms of consulting contract & pricing with Apohan
A presentation by Andreas Schulze of Marsa Corporate finance to the DayOne Accelerator discussing valuation of early stage companies.
If you would like a copy for download, please contact andreas.schulze@marsaco.com
As Associate Principal at The Monitor Group (now Monitor Deloitte) in China, part of my of my role was helping train 1st Year consultants. This is the summary presentation from a day long Masterclass in the commonly used techniques in assessing a firm's "true" value.
CHARTERED INVESTOR PROGRAM:
The Chartered Investor designation is the official designation for analysts and associates in investment banking and private equity. The CI Institute tests candidates on financial modeling and valuation at three levels and provides the designation after all levels are passed and a certain amount of experience is gained in investment banking or private equity.
WHY THE CHARTERED INVESTOR PROGRAM?
Bulge bracket investment banks and leading private equity firms recognize the Chartered Investor designation.
BECOME A CHARTERHOLDER
Earning the CI charter demonstrates you have the knowledge, skills, and experience needed for investment banking and private equity in today's dynamic global markets.
COURSE OF STUDY
The CI Program course of study includes the Candidate Body of Knowledge, the curriculum content, learning outcome statements, and the topic area weights.
ABOUT THE EXAM
The CI Program includes a series of three exams; Levels I, II, and III. The exams: Are offered annually at test centers around the world on the first Saturday in June. The Level I exam is also offered in December.
Planning a Start-up? Our private equity investment PowerPoint presentation slide is just what you need. These equity-based crowdfunding PPT templates will fill the gap between the investors and your company. Download from here: https://www.slideteam.net/private-equity-investment-deck-powerpoint-presentation-slides.html
Apohan is a start-up into consulting services for success-based strategic transactions to SMEs through disruptive, cost-effective, scalable, first-in-the-world, emerging-technology-enabled EquityTech platform.
This video tells the all the strategic financial concepts, especially concepts related to business funding & within that concepts related to equity funding from the perspective of a businessperson or a top management executive. The presentation removes of all the misconceptions of businesspersons regarding equity funding, tells its advantages & disadvantages, compares it with the other options. It goes in details of why most equity funding attempts fails & what can be done to bring about success.
Aren’t you able to mobilize funds for the growth of your company? Is your business stagnated only for money? Do you need funds for a financial turnaround? Do you need to plan your succession? Do you have an aspiration or problem or confusion about your business strategy?
Apohan is an equity funding / strategic corporate transactions / M&A advisory company. We aim to achieve the highest possible valuation as well as best possible contractual terms for our clients within a minimum timespan. We aren’t a broker, an investment bank, or a statutory compliance firm but an all-domain, end-to-end, and custom strategic services implementation company. We do only sell-side (business-side) advisory. We assist the medium & mid-size businesses in India in equity funding, corporate restructuring, financial restructuring & strategic management. Equity funding is our flagship service with transaction size between INR 10Cr to INR 500 Cr for the client companies in the annual turnover range of INR 25 Cr to 250 Cr. We provide success based, time-based as well as objective based services.
Our value proposition:
Our scope of work includes making a prospective client aware of the aspects of equity/strategic transactions, removing their misconceptions, and educating them on the complex process. SMEs don’t have a professional BOD, dedicated departments for business strategy, corporate management, financial strategy, contract strategy, transaction management, etc and they also don’t know how to identify right consultants, their scope of work, and deliverables. We carry out end-to-end scope including deal/transaction structure, investment requirement schedule, on-boarding investors, study of operational documents, preparation of transaction documentation, valuation, negotiations, due diligence assistance, investment contract, deal closure & handholding. We provide all expertise from a single company: finance, secretarial matters, business strategy, contracts, investment, etc. We also understand projects, engineering, operations, marketing & other aspects of business to the extent needed for a transaction. All this leads to a very high success rate.
Follow us on linked to understand more: Apohan LinkedIn Page and Presentation on Business Funding Strategy & Options for SMEs
Our client selection:
We just don’t select any business to provide our services. We carry out the following 4-step process:
Technical 1: The soundness of a business in terms of market, operations, profitability, management quality, corporate matters, etc.
Marketing 1: The ability & preparedness of a business to carry out a transaction in terms of timeline, budget, availability of documents, clarity of objectives, etc.
Technical 2: The reasonability & rationality of the offer to be made to an investor in terms of expected valuation & terms of contract.
Marketing 2: The terms of consulting contract & pricing with Apohan
Before you start a business you need capital to ensure the sufficient requirements. Therefore, you can raise capital from a number of parties such as bankers, investors and customers. Before you send your proposal, you need to explain more about the purpose, budget, target and the amount you want to borrow. So this is an example of the best presentation slide.
Presentation slide describing a potential portfolio of 6, well-known tech companies. Includes short descriptions of each of the component firms, a review of the portfolio as a whole, and historical returns of each firm for the past 5 years.
Speaker: Chris Sullivan, Vice-President, Finance & Operations, IDC (Canada) Ltd.
More information including webcast found on the MaRS site at: http://www.marsdd.com/Events/Event-Calendar/Ent101/2008/marketing2-20080116.html
thanks for your submission. Prior to introducing the SWOT anal.docxarnoldmeredith47041
thanks for your submission. Prior to introducing the SWOT analysis, your audience needs some background information about the company. Your work lacks a description of the company's history. Your assessment of the financial performance and condition of the organization is brief and does not include any of the concepts covered in class or include any scholarly sources. You provided a good analysis evaluation of the external environment and the organization's opportunities and threats. However, you are missing details about the internal aspect of the company and its strengths and weaknesses. A thorough evaluation of the results of the SWOT analysis requires an investigation of all four component. Good work, you demonstrate your ability and skills to measure performance and recognize trends. However, you may want to analyze some performance indicators even more closely as there are some performance trends you may want to consider and look at more closely. You used the required number of scholarly sources to support ideas. All sources on the reference page are used and cited correctly within the body of the assignment.
Running head: MICROSOFT SWOT ANALYSIS
Microsoft SWOT Analysis
Brea P. Sylvester
BUS402: Strategic Management & Business Policy
Professor Fred Fening
19 January 2019
Brea Sylvester
Brea Sylvester
MICROSOFT SWOT ANALYSIS 2
Microsoft SWOT Analysis
Introduction
A SWOT analysis is a breakdown of a firm’s strengths, weaknesses, opportunities, and threats in
a nutshell. It is an essential tool to deciphering the state of a firm at any one point and is usually
looked at in line with the firm’s ability to satisfy consumers, the market reach it had gained since
it was established, and the level of competition in the market. A firm has to reach this vital
process in order to develop or explain the basis it is doing business. Such information is
especially helpful to staff, top management, shareholders, and government and is thus requested
from time to time in different capacities and formats. For Microsoft, which is a company that
sells computer and software-based products, the SWOT analysis has been particularly helpful in
helping the company attain early market domination and has since faced fierce competition from
companies such as Apple, Facebook, and other Asian based tech companies like Samsung and
Huawei.
Discussion
Specific Areas That Need Change
Some of the fundamental questions that can be asked with regards to a Microsoft SWOT
analysis include What resources are readily available to the firm? How far is its market reach?
What elements give it a sustainable competitive advantage over the rest of the firms doing the
MICROSOFT SWOT ANALYSIS .
Enterprise information archiving market is expected to grow $10.8 billion by ...DheerajPawar4
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Enterprise information archiving market is expected to grow $10.8 billion by ...DheerajPawar4
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Enterprise information archiving market is expected to grow $10.8 billion by ...DheerajPawar4
[147 Pages Report] Enterprise information archiving market categorizes the global market by content type, by service, by deployment type, by end user, by industry application & region.
Enterprise information archiving market industry analysis and global forecast...DheerajPawar4
[147 Pages Report] Global Enterprise Information Archiving Market was valued USD 5.7 billion in 2020 and is expected to reach USD 10.8 billion by 2025, at CAGR of 13.5% during forecast period
Below please find a link to our monthly market perspective piece for June. This month we dive deeper into equity market year-to-date returns and discuss the narrow leadership that has re-emerged, primarily from several large technology companies.
Crises, societal progress, governmental intervention, global economics, and technology are the driving forces behind dramatic change in business. How does your business strategy address these factors today, tomorrow, and down the road? During this webinar, our experts will help you assess your readiness to react to an ever-changing business environment, and arm you with the tools you need to plan for continued success.
Learning Objectives:
At the conclusion of this session, you will be able to:
■Identify how technology and other factors will affect your organization in the short and long term.
■Communicate how change will affect your strategy regarding products and services, markets, customers, and other variables.
■Determine what level of investment you’ll need to make, as well as the impact on your capital structure and what the return on investment will be.
■Understand the value of real-time information to gain competitive advantage
Mobile security market is expected to grow $7.2 billion by 2024DheerajPawar4
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Mobile security industry to grow $7.2 billion by 2024DheerajPawar4
[228 Pages Report] Mobile security market categorizes the global market by end user, solution, service, deployment mode, organization size, vertical, operating system & region.
Mobile security market report by marketsand marketsDheerajPawar4
[228 Pages Report] To provide detailed information about the major factors (drivers, restraints, opportunities, and challenges) influencing the market growth.
Mobile security market vendors by share & growth strategies 2024 marke...DheerajPawar4
[228 Pages Report] Mobile security market categorizes the global market by end user, solution, service, deployment mode, organization size, vertical, operating system & region.
Similar to SIBC-OSG Investment Proposal Presentation (20)
2. Two Companies Proposed for
Potential Investment
SalesForce Facebook
market cap: $52.39 Billion
Market Share: 33.2% CRM
Market Cap: $301.75 Billion
Market Share: 66% Social
Networking
Started 1999
Predicted to be 4th largest software
company in the world in two years
Global leader in Social Networking
Strongest Financial statements
Predicted growth
3. United States Economy Analysis
General trends -- Relatively steady economic growth since 2010
- Dominated by services-oriented companies
- Tech, financial services, healthcare and retail
- Have honed in on tech
- As in the our most recent decade it has made significant moves
and will likely continue to
- Big data and consumer analytics
- Uber vs. Taxi
- Airbnb vs. Hotel
- Netflix vs. cable tv
- Social media and peer-to-peer sharing
5. United States Economy Analysis
The reason for strong growth in service and technology industry is the
underlying strength of the US economy:
• Good infrastructures
• Huge Market
• Good investment environment
• Excellent supply of talents and good education resources
• Strong innovation culture
• Global influences
6. Prediction of Economic Trends
Revenue Growth
over next 5 years:
Software publishing:
15% increase in
revenue
Data processing:
22% increase in
revenue
7. Prediction of Economic Trends
Overall we expect US GDP Annual Growth Rate to stay around 2% within next 5 years
● Safe market
High technology industries will further expand and claim growing importance
● Growth will depend more on innovation and technology breakthroughs
● Traditional industries will continue to be revolutionised with the emergence of
new technologies
11. SWOT Analysis of US IT Industry
Strengths
1. Variety
2. Strong growth
3. Quick return on investment
4. Strong societal awareness
5. Huge pool of talent resources
6. Readily accessible investment
funds
Weakness
1. Potential for breach in
information security
2. Rapid obsolescence cycles
3. Technology stagnation
Opportunities
1. Markets in emerging economies
2. Positive societal expectations
3. Huge room for potential growth
(lots of traditional industries in
the wake of IT revolution)
4. New technology products
Threats
1. Competition from overseas
● Low barriers to entry -
emerging economies
12. Overview of Strategy, and choosing
our Investments
Within IT Industry
Focused on two dominating sectors:
• Customer Relations Management (CRM)
• Social Networking
Why CRM :
• Although Industry value added continues to be in line with national GDP -- industry is
recession proof
• the industry's products continue to be accepted by the market
Why Social Networking :
• Becoming an integral part everyday life -- continued growth predicted
13. Facebook Overview
Company Summary
Facebook, Inc. is a social networking
company. The Company is engaged
in developing products that enables
users to connect and share through
mobile devices and personal
computers.
Key Facts and Statistics
Founded: 2004
IPO Year: 2012
Ticker: FB (NASDAQ)
Sector: Technology
Industry: Internet Content and Info.
Headquarters: Menlo Park, CA
CEO and Founder: Mark Zuckerberg
Number of Employees: 10,082
Market Cap: $301.75 Billion
Stock Performance Last Two Years (Compared to S&P)
14. SWOT Analysis of Facebook
Strengths:
1) Diverse user base
2) Mobile integration
3) Cross-platform integration
4) Popular, news-savvy management
5) Strong stock performance, maintenance of market share
Weaknesses:
1) Dependence on ads for revenue
2) User privacy, information filtering
3) Substantial R/D expenses associated with innovation
Opportunities:
1) Recent acquisition of Instagram, WhatsApp → Wide variety
of appeal and interconnectivity
2) Expansion in app markets, intriguing safety features
3) Inclusion of additional tools for developers, explosion of
new features
4) Growth of revenue from payment processing fees, services
completed online
5) Broadband growth → Expansion of user base in less-
developed areas
Threats:
1) User bias towards SM platform (Snapchat, Twitter, Vine)
2) Millennial user “cool” factor
3) Trend away from personal, mobile computer usage →
potentially less ad revenue
4) Eat or be eaten mentality: talent and creativity outweigh
establishment to some extent → Barriers to entry not
terrible for small startups
15. Source: The Street Industry Data, IBISWorld, Nasdaq
Facebook Financials
Facebook Industry Average S&P 500
Price to Earnings
(P/E)
104.10 59.80 28.61
Price to BV 7.28 6.65 6.94
Price to Sales 19.63 9.56 2.93
Price to Cash
Flow
65.70 39.90 15.59
Sales (5YR
Growth Rate %)
633 28.84 5.93
16. The Case for Investing in Facebook
1. 40 million small businesses use Facebook
• FB has proprietary ad software so they can track ad effectiveness
2. Over 1 billion people use Facebook daily
• Growth is global
3. Instagram, WhatsApp and Oculus Rift have yet to monetize
4. Recently invested $500 million in new data center in Texas
17. Salesforce Overview
Salesforce.com Inc provides enterprise
cloud computing solutions, offering
social and mobile cloud apps and
platform services, as well as
professional services to facilitate
the adoption of its solutions.
Founded: 1999
IPO Year: 2004
Ticker: CRM (NYSE)
Sector: Technology
Industry: Software - Application
Headquarters: San Francisco, CA
CEO and Founder: Marc Bernioff
Number of Employees: 16,227
Market Cap: $52.06 Billion
Stock Performance Last Five Years (Compared to S&P)Company Summary
Key Facts and Statistics
18. SWOT Analysis of Salesforce
Strengths
1) Robust revenue growth
2) Solid stock price performance
3) Compelling growth in net income
4) Good cash flow from operations
5) Expanding profit margins
6) Low level of volatility
7) Company's product is user/consumer friendly
8) Mature industry and thus revenue is growing at the
same pace as economy
Weaknesses
1) High debt management risk
2) Negative Net Income
3) Profits
4) Valuations
5) Security
Opportunities
1) Jump-start international growth
2) Global leaders in niche sector (CRM)
3) Cloud market is robust
4) Actively acquiring to grow horizontally and vertically
Threats
1) It is competing with established brands like Oracle and
SAP
2) Barriers to entry are medium and steady
19. Salesforce Close Competitors
Salesforce Intuit Dassault
Systemes
Rev Growth
(3 Yr Avg)
40 3.3 8.8
Revenue in Millions
(TTM)
5,974 4,192 4,368
Price to Sales 8.7 9.7 11.2
Price to Book 11.6 13.4 12.4
Intuit Inc creates business and financial management solutions that
help simplify the business of life for small businesses, consumers,
and accounting professionals.
Dassault Systemes SA provides end to end software applications and
services, designed to support companies’ processes. It provides
Product Lifecycle Management, 3D Design, and 3D Digital Mock-Up.
20. The Case for Salesforce
1. Salesforce.com Inc provides enterprise cloud computing solutions, offering social
and mobile cloud apps and platform services, as well as professional services to
facilitate the adoption of its solutions.
2. Salesforce has customers on long-term contracts generating predictable recurring
revenue
3. Revenue continues to grow further and the Salesforce has scores of deferred
revenue which will pour into their coffers in the near future.
4. Analyst projected EPS growth over the next 5 years at 55%
5. A merger or acquisition deal is on the cards. If some sort of a merger or acquisition
deal does indeed occur then Salesforce’s share value will increase exponentially
and investors will make a handsome profit. However, even if the acquisition
rumours and the indications given off by the company prove to be unfounded
6. It has brought revolution in technology. It is working on sales diversification by
region and more high-end multiple products sales and therefore its stock price has
nearly unlimited room to run for early-in-the-know investors.
21. Recommendation for investment
Conservative scenario
Value of money in 5
years, if market grows
at the rate of 5%
63814.07813
Salesforce Facebook
Current stock price 71 107
Diversifying investment 12000 38000
Number of stocks that
can be bought
169 355
Predicted lowest value
of the stock
60 153.6123379
Worth of stocks after 5
years
10140 54532.37995 64672.37995
22. Growth scenario
Value of money in 5
years, if market grows
at the rate of 5%
63814.07813
Salesforce Facebook
Current stock price 71 107
Diversifying
investment
12000 38000
Number of stocks that
can be bought
169 355
Predicted highest
value of the stock
150 153.6123379
Worth of stocks after
5 years
25350 54532.37995 79882.37995
23. What if scenario
Value of money in 5
years, if market grows
at the rate of 5%
63814.07813
Salesforce Facebook
Current stock price 71 107
Diversifying
investment
0 50000
Number of stocks that
can be bought
0 467
Predicted lowest value
of the stock
52 153.6123379
Worth of stocks after 5
years
0 71736.9618 71736.9618
looking for trends
found significant growth in IT, and this is what we looked into
From looking at the graphs, want the viewer to be able to deduce for themselves that we are choosing a strong sector for investment
comparing driving components of industry to more standard components of industry
From looking at the graphs, want the viewer to be able to deduce for themselves that we are choosing a strong sector for investment
Strengths:
$12.47 billion in revenue in 2014. From as far back as 2008, Facebook has commanded at least 40% of the monthly social networking visits. Facebook had over 1 billion monthly users in each of the 12 months last year, in 2014. This represented an 18% increase from 2013, and recently released Q3 preliminary reports for 2015 indicate a similarly healthy double-digit increase from 2014 to 2015. The sheer volume of users, combined with a burgeoning number of mobile users should carry forward Facebook’s usage. (27% MDAU growth from Q3 ‘14- Q3 ‘15)
Of course, the number of users that Facebook draws to the site is essential to the service, as social networking sites represent a way to communicate regardless of distance, time, and operating platform. According to industry research on IBISWorld, revenue has grown on average 42.3% for the years 2013-2015. Strong performance in generating advertising revenue, along with a successful IPO under the guidance of founder Mark Zuckerberg in May of 2012 has resulted in exceptional growth in both stock price ($28 in December 2012 to roughly $110 trading today) and a good P/E ratio (104.10 vs. 59.80). 66.1% market share, IPO tripled revenue
Weaknesses:
Facebook, as was mentioned earlier, is heavily dependent on advertisements on the site for revenue. Because the company offers no tangible service, but has an enormous reach in the consumer world, advertisers are drawn to it as a new, trendy medium for getting their messages across. Additionally, there have been a number of scandals involving the breach and leak of private data, which is always under threat from talented hackers. Lastly, Facebook is a cutting-edge tech operation. In order to stay ahead of the curve, they must invest substantial capital in research and development. The $2.7 billion dollars they spent in 2014 represented 22 % of their total revenue.
Opportunities:
As Facebook has developed substantial cash flow, they have had the ability to buy out additional companies with significant market impact. April of 2012 saw the acquisition of Instagram, in a $1 billion deal, while 2014 saw the purchase of WhatsApp for $19 billion and Oculus VR for $2 billion. These additions to the Facebook family allow inter-platform sharing, and can serve to diversify Facebook’s services and acquire new talent. Additionally, 7.8% of tot rev in 2014 was accounted for by the collection of payments for online services pertaining to monetary processing. Lastly, there is expected to be 15.6% yearly broadband growth in ‘15-’17 resulting in a further reach for Facebook’s services in areas still developing their mobile infrastructure.
Threats:
The Social Network Services sector is a fickle one, prone to consumer abnormalities and brash decisions. Any company can get a couple of ultra-talented hackers into a room and develop a stellar website from a stellar idea. Though there are a number of established players, who have made huge fortunes over the last 5-10 year, startups pose a significant threat to becoming the ‘next big thing’ should Facebook and its subsidiaries become complacent in the marketplace. Facebook has, from its inception, appealed to young users, though in 2014, the rate of usage growth was highest among adults 65 and older. Teens often spurn the technology favored by their parents, so this could signal stock volatility in the coming years. 11% growth of users 65+ from ‘13-’14 v. 3% 18-29
Comments: 30/30 analysts from major investment banks gave Facebook a strong buy or buy declaration, and, despite having a high P/E ratio, this most likely corresponds to the growth at the company in the last several years. A high P/E ratio indicates that investors are keen on purchasing the stock on the projections of future growth, and since Facebook’s ratio isn’t in the 20-40 range in which it might be considered overvalued, it looks solid. Facebook’s Price/Book Value ratio is more in line with the rest of the industry, most likely due to the fact that Facebook reports a substantial amount (~18 billion in 2014) of Goodwill. Again, the Price to Sales and Price to Cash Flow are higher than industry average, due to the growth potential of the company. Something not shown, but still important to consider is the debt to equity ratio, for Facebook, .3%, which is incredibly low. This means that Facebook still seems to be getting substantial investments rather than incurring debt to fund operations and research.
While CRM’s market valuation seems inflated, comparison to other SaaS players with similar financial profiles shows it is actually trading at a bargain.
