Facebook Ready to Reach the Moon

  • Winner take all tech is manifesting itself in the market
  • Facebook is ripping to new highs on a great Q3 earnings report
  • Emphasis on long term growth instead of short term earnings makes Facebook the most loved stock on Wall Street

Facebook, joining the ranks of Apple, Amazon, and Google has become one of the most loved stocks on Wall Street and Main Street. The social media company has the largest active user base in the world. Facebook currently services up to 1 billion users in a single day.

We are seeing “winner take all” tech manifesting itself in the markets. Users beget more users which creates an unstoppable momentum pattern of attention. This creates a monopolistic scenario where one company owns almost all of our daily attention. Facebook is one of these crowned champions.

FB’s Q3 earnings report shattered expectations.Their ad revenue and user engagement is booming. The titan of social media reported earnings of 57 cents per share on $4.5 billion in revenue. The Street was expecting 52 cents a share on $4.37 billion in revenue. Furthermore, the Street expected daily active users to come in at 992 million, Facebook beat there as well boasting a 17% increase to 1.01 billion daily users.

FB User Growth

Facebook is proving real time for us just how well a social media website can be monetized.

The Core Business Going Strong

Facebook’s core business is ad revenue. Analysts were skeptical of whether or not the company could make the transition to mobile as more and more users ditched their laptops in place of cell phones for Facebook access. Those skeptics are eating their words as mobile advertising revenue now makes up over 78% of their total advertising revenue and continues to climb. Businesses small and large alike are foaming at the mouth to place more ads on facebook.

RBC capital markets conducted a survey in September and 61% of marketers surveyed said they planned to spend more on Facebook ads next year. SocialCode, an advertising-technology company, says its clients’ spending on Facebook video ads tripled during the first three quarters of 2015 when compared with the same period in 2014.

Exciting Growth Ahead

Facebook killing their Q3 earnings is only the foundation to the bullish narrative. Beyond growing EPS and sales,  Facebook has a tremendous amount of exciting “disruptors”  in motion.

Their acquisitions of WhatsApp and Instagram have proven to be excellent decisions. WhatsApp has over 900 million users and Instagram has over 400 million users. WhatsApp is still in a holding pattern, waiting to be monetized, but Instagram is already pulling in over $100 million in ad revenue and analysts project that number to be between 300 and 700 million dollars by the end of 2016.

On the search side of things Facebook processes 1.5 billion searches per day and has over 2 trillion posts indexed. This mass collection of data from customers aids in customizing and delivering an even better user experience. Personalized advertising is what will grow the and push the advertising industry in the future and Facebook has a huge leg up over competitors. Years of personal data storage makes it next to impossible for other companies to catch up and build an equally valuable database. Once this pandora’s box of valuable data is monetized correctly who knows how much ad revenue can skyrocket. Foundation Investing members are positioned long in the stock to take advantage of this next leg of high octane advertising revenue.

Long Term Innovation Not Short Term EPS

It’s refreshing to see a mega cap company focus on innovation and investment rather than short term EPS to please Wall Street analysts. Facebook is choosing to up expenditure in their capital investments so they stay an important force in our lives for the long haul.


FB Capital Investments

Ground breaking and massively disruptive tech is emerging from these efforts. It’s not hard to mistake Facebook’s aspirations for a plot out of a science fiction novel.

Facebook plans to launch solar based drones to fly over remote areas of the planet to provide internet access. Only 37% of the world has access to the internet. By making the internet more accessible, Facebook can accelerate their user base even more. Facebook is on track to be one of the first companies to service the entire world.

The internet drone is only the beginning of Facebook’s ambitious innovation plans.

Facebook’s A.I. development is in pace with other tech giants such as Apple and Google. Artificial intelligence is seen as a key component in the future of big tech and Facebook does not want to miss the ride. Facebook is testing an artificial intelligence feature that will answer questions about a photo. This feature aims at helping blind people interpret the content posted to the social network.

Additionally, they are working on advanced memory networks which allow a machine to perform sophisticated questioning and answering. The impact of this type of technology could alter search as we know it. Imagine asking Facebook “How many people in Detroit like fantasy books?” and it being able to instantly understand your voice and respond to you by checking its proprietary personalized database. Whoa.

The Golden Goose: Oculus

Facebook’s virtual reality efforts, that started with the 2 billion dollar acquisition of Oculus, are close to becoming available for mass distribution in early 2016. Oculus virtual reality offers a fully immersive 3D gaming experience and is one of the most widely anticipated product releases for next year. Facebook plans to not only change gaming but extend virtual reality into all media including movies and television. The hardware itself comes with a Facebook Oculus app inside the headset which allows people to communicate. Early beta testers describe the experience as feeling as though you were in the same virtual space as someone else. So not only do we have groundbreaking and innovating gaming and media experiences hitting the market soon, we can look forward to a revolution in the way in which we communicate over the internet.


Facebook dominates now and is positioned to grow and profit nicely in the future through its new technologies and acquired platforms.

The company is impressing investors by crushing earnings while simultaneously investing in long term research and development. This is a rare combination on Wall Street these days and investors are celebrating the winner take all effect in big tech. Facebook looks poised to travel to the moon and beyond.

Foundation Investing is long Facebook stock.



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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

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Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

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Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

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