Facebook: Don't Overlook This Low-Risk, High-Return Investment

Credit: telegraph.co.uk

Summary

• The Internet userbase and marketing expenditures are expected to grow in the next few years.
• The market analytics of Facebook are improving, and the operating costs are declining steadily.
• The company is generating healthy cash flows, which are currently being overlooked by the market.
• The cash flow valuation reveals that Facebook is a good investment opportunity at the current price.

Investment in stocks is a tricky business. Good opportunities are often ignored because of an overwhelming number of stocks on the market. Some trading opportunities can easily be overlooked due to unrealistic expectations, false trendlines, faulty technical analysis, and poor forecasts.

For instance, mature and large organizations normally entail a low capital return on stocks. However, this is not always true. Some organizations are perceived to be mature, while they still have promising future growth prospects. Facebook (FB) is a perfect fit for such an organization.

Facebookis the most popular social networking platform, with around 1.28 billion monthly average users. Advertisement is the primary monetization model for Facebook. Facebook generated around 90% of its revenue from the advertisement segment in the first quarter of 2014. Payments and fees from developers and third-parties made up the remaining 10%.

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