Is Facebook Inc (NASDAQ: FB) Stock Undervalued?

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Facebook (NASDAQ:FB) continues to lead the market in embarrassing stories such as Russian connections, hacking scandals, and ham-fisted apologies. Putting that aside FB stock is getting too cheap to ignore. It’s now trading at only 17X current year earnings. With that in mind, analyst estimates have been slashed over the past six months as Facebook has talked up the many ways in which they’re going to spend billions on making the platform more secure. That’s the perspective from the investor and pundits, but do the two billion Facebook users even care? That’s apparently not the conversation that’s taking place among the vast majority of Facebook users. 

Personally, I have major concerns that social media is undermining our ability to be a democratic nation, and it’s taking us time to educate ourselves about how manipulated we can be. On the other hand, it also does a lot of wonderful things in keeping families and friends in contact. Sometimes its hard to figure out how users value Facebook, but the fact that user numbers have not declined, at least so far, indicates Facebook users think it’s pretty valuable.

Moreover, the advertising still works, so advertisers are still pouring money into Facebook’s accounts. It’s pretty clear that people want online social networks, and that personalized advertising works. You don’t often see huge companies with rapid revenue growth selling at market multiples, so you really might be missing an opportunity by not buying FB stock at these prices. 

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