Facebook stock has struggled to keep up with the stellar gains of its mega-cap tech peers, and the problem can be found at the product level, which discounted cash flow analysis does not help to detect.
The company fires on all cylinders when considering Warren Buffet’s investing discipline to seek companies with strong free cash flow and no debt.
Facebook’s dilemma is that its applications cannot co-exist with privacy in their current state. If regulations or reputation issues truly force the company to build privacy into the products, then Facebook won’t be quite the cash machine that it is today.
For instance, Facebook’s average revenue per user in the United States is at $41 ARPU in the United States and $7 ARPU globally compared to Snap’s $2 global ARPU and Pinterest’s $1 ARPU. This premium that Facebook charges comes from having more data on their users that extends beyond the data collected in Facebook’s family of apps.
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