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Oh it is a tough day for facebook investors out there facebook stock is down nearly 20 percent today just an a dramatic down fall down over $40 a share which is unbelievable now i want to get into a lot of different things in this video i want to give them into all the factual information okay i also want to get into the real reason facebook stock is down so much

Today okay and then lastly i want to kind of get into am i gonna buy facebook stock and i got a short facebook stock am i gonna do anything with facebook stock am i just like not care about that stock i want to get into all of that here today okay we’ve got a lot to get into first off like facebook stock has come back very dramatically since the cambridge analytical

Situation the stock fell to like the 150 its range and then from there after that kind of got over the stock just flew up like insane okay and next thing you know it was like 217 dollars so although it is falling a big deal today down to 170 years $175 ranger so we just got to remember that this was a stock at its 52-week high as its all-time high okay not just

52 weeks and it literally its all-time high going into this earnings so it’s really priced to perfection okay so let’s get into this guys the first fact we gotta add knowledge is wall street if you’ve never done didn’t understand what wall street is a bunch of old ass rich white mofos okay those are the people who dictate whether stocks go up or down okay go look

At the list of the biggest hedge fund managers mutual fund managers or whatnot these are the guys that are controlling the money in the system and whether stocks could have a huge day where their facebook stock was up 20% today or down 22% based upon their buys and sells because they follow a bunch of money here together and they have tons of money to invest okay

That’s who controls wall street the something we got to understand i’ll bring it back to that point in just a second okay so the first fact is europe daily active users fell 3 million on the facebook platform okay that’s not including instagram that’s not including whatsapp or any other facebook products just on the facebook platform europe early active users fell

3 million that’s a pretty big number there okay the u.s. in canada was flat for daily active users alright for the facebook platform so you had flat in the u.s. in canada and then you’ve had a drop of daily active users of three million in europe okay so these guys who have no clue about culture and what is you know cool out there and what people actually want

To use these guys have no conception of it all they know how to do is look at numbers and be good salespeople to get people to give them another 100 million for them to invest okay that’s what they’re good at they just look at the numbers they have no clue on what’s cool and what’s not so this comes as like a shock to these guys okay they’re like oh my gosh you

Mean to tell me that that facebook isn’t cool anymore and like europeans are starting not to use the service as much and oh oh my gosh the u.s. in canada could fall soon this is like they’re just like popped out their head now they actually see the concrete numbers okay anybody with a half a brain has understood this with the facebook platform for years facebook

Has been cool for five years now guys okay it’s been a long long time in the u.s. in europe and that facebook has been cool it’s been a long long time okay but these guys just i have no clue about culture they have no clue about the fact that young people dictate what’s cool okay unfortunately we’re fortunately whatever way you want to look at it high schoolers in

College cuz they did take the whole system okay apple understood this better than anybody and how did apple come on the huge comeback well because they got the younger generation i love apple products they started buying ipods they started asking their parents for ipods all that type of stuff and next thing you know apple’s now the biggest company the world steve


Jobs understood this a long time ago okay but these guys don’t understand anything okay they don’t understand anything about what is cool and what is not they’re so out of touch because they live in their little super rich bubbles or billionaire bubbles okay and they hardly ever talk to their kids which i would highly suggest they actually talk to their kids but

Unfortunately even their kids a lot of times are out of touch and aren’t in touch with the real world because they’re so freakin rich okay so it’s a tough situation for them okay so that’s how something like this can happen and this can shock these guys oh my gosh users have gone negative in europe what’s gonna happen in us and canada next okay that’s a big thing

No some more factual information revenue was up 42% year-over-year in the quarter two percent that’s a massive massive increase especially when talking about a company’s facebook size its company with over half a trillion dollar market cap over half a trillion dollar market cap in their revenue is up 42% that’s unbelievable growth net income was up 31 percent okay

This is actually kind of a bad sign in the sense of you usually want net income to be rising faster in revenue revenue was up 42% but your net income was only up 31% that’s because of a lot of things that we’ll get into they now have cash of 42 billion dollars on that balance sheet and no debt okay forty two billion dollars no debt by the end of the year they’ll have

Way over fifty billion dollars probably up to sixty billion dollars in cash on the balance sheet and they’ll still have no debt all right employees are up 47 percent year-over-year the head count is up 47 percent year-over-year which explains why net income will grew way less in revenue did okay in most situations you’re gonna see with a lot of companies and the

Income is gonna grow faster in revenue but with facebook here because they’ve added so many employees it’s it’s killed a lot of their profit growth okay 47 percent up year-over-year is that’s a lot of employees okay that’s ten thousand plus more additional employees they have this year then versus last year guys it’s a dramatic amount okay now also here’s a second

Part i don’t know why the stock is down big today okay the first one is oh my gosh we’re starting to lose users in the most profitable markets okay that was the first part the second part is revenue growth is expected to slow down to 20 to 30 percent that’s still unbelievably really good okay twenty to thirty percent revenue growth is great but when you’re used

To growing 42 percent all of a sudden a lot of these growth investors these super high growth investors are like wait a minute growth just slowed down in a major way now you’re talking about twenty to thirty percent revenue growth after you were on forty percent plus clips wait a minute wait a minute we don’t know if we want to be in this stock okay that’s where

A lot of high growth investors look at it all right yeah you know twenty percent that’s not sufficient for a lot of high growth investors they want companies that are grown 40 plus percent and this stock just went from 40 percent to now we’re talking about to be in the 20s that’s a massive change our guys in margins are expected to fall why margin is expected to

Fall because they’re spending so much money on a new heir employees safety systems so many different things after the cambridge analytic a situation the lack of trust in facebook platform across the board okay so you have a lot of stuff going on there right a lot of stuff going on now at this point in time let’s get into what i plan on doing and kind of my view on

Facebook stock my take on facebook stock now that we have the facts understood now what am i gonna do with facebook stock am i gonna buy this stock am i gonna short the stock am i gonna buy call options put options meng’ao trade options what i plan on doing with facebook stock and i am gonna more than likely start buying facebook shares okay and buying them how

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I usually do in two to five thousand dollar increments and we’re going to go through right now why i’m gonna start buying these shares and by the way this is jump all other positions i wanted to add even the three stocks i was talking about yesterday’s video three stocks i’m buying since facebook has dropped so much this has probably jumped all other companies

In in terms of companies i actually want to start adding shares in okay so everything i’ve ever said about facebook is coming true okay there are two things basically every time i bring up facebook on it on the channel for the past year there are two things i consistently bring up including like the video i talked about top millennial stocks like a week ago or

Whatever two things that bring up the first is facebook will continue to be a profit machine for years to come that is playing out and that will can now be true and true and true the second part i always bring up is that i’ve always said that in 2018 it was gonna be the year where the old dies on wall street that control all the money start to figure out that

Facebook growth is slowing in that’s gonna freak him out i see that every single time i talk about facebook’s talk on this channel those two things both those are absolutely coming true i understood like the philosophy of wall street i understand who runs the money on wall street you understand that you’re gonna understand that also in these numbers are gonna get

To a point where else and they’re gonna be like these aren’t as impressive anymore and they’re gonna freak out okay so facebook is a straight money printer okay and will continue to be a straight money printer for a long time to come okay although users are weakening it’s still in a position where that company is gonna make fabulous amounts of money facebook and

Well i’m just talking about facebook platform i’m not even talking about instagram i’m not even talking about whatsapp or anything if we’re just looking at from the facebook perspective that was a stan company their profits will continue to explode for the next several years okay that’s the first part all right second part is instagram is a hutus social platform

Out there by far and away facebook owns instagram okay instagram now has over a billion people using that platform and we’ll probably get to a place where it’s bigger than facebook maybe within a year or two okay i think there’s a great possibility of that so then they own the hutus platform out there in instagram that is pretty name good man when you own that so

Some people want to say facebook is a new myspace which is totally not true and i totally don’t agree with that although facebook you know is in a plate is place where they can’t really or grow much more are they the next myspace and my opinion no they’re not the myspace like they went out of business i was a total different thing myspace was never even that huge

In the first place okay and then it just completely fell apart i don’t say that but if you want to say facebook sit next myspace go ahead and say that well guess what’s the next facebook its instagram okay so that’s pretty awesome when you own the number two out there the platform where everybody’s at all right now in regards to instagram monetization is in early

Days on instagram okay it’s still in the infancy of the monetization age of instagram that’s a platform that the revenues and profits from just instagram if that was a standalone company we could actually see everything behind that are going to continue to explode at 50 to 100 percent clips for the next three to five years alright it’s a very early days and also

Whatsapp which has over a billion people using on another platform that facebook owns okay and their messenger those those platforms have hardly been touched in terms of monetization so if you’re looking at from monetization handles of what facebook can pull they have a lot more to pull with the facebook platform okay they have a dramatic amount took more to pull


For instagram over the coming years and whatsapp and messenger they haven’t even been touched they’re like just kind of reaching for the handle right now okay so which means there’s a huge potential for profit and revenue growth for this company over time all right that is pretty unbelievable also ad rates are gonna start to increase on a major way over the next

Three to five years and rates on every platform i don’t care if we’re talking about here on youtube i don’t care if we’re talking you know google words those ones might kind of stay around where they’re at but facebook ads instagram ads twitter i don’t care well pretty much any platform you talk about out there if it’s in relation to social and it can directly

Link people to a to somewhere off of their it that had rates are gonna go up in a dramatic way okay and i’m not the only one that feels like that was also a lot of people that feel like that on social gary vaynerchuk being one of them a lot of people feel like ad rates are gonna explode over the next three to five years all right also this company has a forward

P/e right now under twenty let’s keep in mind there’s a company that still expects to grow revenue at a twenty or thirty percent clip okay which means net income probably the same around the twenty or thirty percent clip and we’re giving this company for a p/e under twenty up he under twenty guys like seriously no debt on that balance sheet they’re gonna have well

Over fifty billion dollars likely unless they buy some huge company it’s soon or something they have way well over fifty billion dollars by the end of this year in cash just sitting on that balance sheet holy smokes guys i mean think about the share buybacks they can do and whatnot with all the cash you’re gonna have coming in they can start doing something like

An apple where they have all these profits coming in and they just start buying back shares like crazy or they can start issuing dividends there’s so many different things this company can do so when i look at this it has now replaced apple in my opinion this company has now replaced apple in terms of the easiest money an investor could make over the next five

To ten years when i look out over the next five to ten years like i try to think about like what’s the least risk in a particular stock with the most reward i used to be apple number one i’ve had that number one for a while i’m replacing apple now with facebook apple’s going down to the number two easiest money in the stock market facebook honestly right now is

The easiest money someone can make in the stock market in my opinion over the next five to ten years which is why i’ll likely start buying at high high probability and i’ll just continue to add shares you know two to five thousand at a time and if it goes down you know lower cost basis and whatnot i’m gonna it’s such easy money it’s just disgusting guys anybody

That understands anything about how how advertising is done and how like how much money is gonna flow into this space you know with television advertising overtime like knowing that i watch these tv ads anymore there’s still somewhere between 60 and 90 billion dollars like spent on tv ads a year for my understand that’s just in north american never mind around

The world like all that money is gonna flow over to these guys okay it’s all gonna flow over to google through the youtube platform into facebook and some of these platforms that have massive amounts of users on it guys easy money so anyways i wanna know your guy’s opinion on facebook as a company i would love to hear from you guys down there in that comment

Section as always make sure you follow me on instagram if you have not already thank you for watching have a great day

Transcribed from video
FACEBOOK STOCK CRASH. will i buy? By Financial Education

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