Technology

Why Mega-Cap FANG Tech Leaders May Be Offering Investors Incredible Value

Facebook

The huge social media leader has been incredibly volatile and had an absolutely wretched 2018. Facebook Inc. (NASDAQ: FB) is the largest social network with over 2.0 billion monthly active users and over 1.4 billion daily active users. The company generates revenue from advertising and from payments, with over 95% of revenue from advertising. It generates close to 50% of revenues in the United States and Canada and is expanding rapidly in international markets.

The company’s solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.

Despite the terrible earnings results posted last year and other negatives that caused the shares to sell off a massive 43%, Facebook is used by some 60% of small businesses, which utilize the company’s advertising platform in some way for their businesses. The ability to grow that number is a huge positive for the beleaguered social media giant.

The $187 Merrill Lynch price target compares with the $196.07 consensus target. The shares were last seen trading at $165.55 apiece.

Netflix

This Wall Street darling could still offer solid upside despite newly announced streaming competition. Netflix Inc. (NASDAQ: NFLX) is the world’s leading internet television network, with more than 120 million members in over 190 countries enjoying more than 125 million hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments.

Netflix is available on virtually any device with an internet connection, including personal computers, tablets, smartphones, smart TVs and game consoles, and it automatically provides the best possible streaming quality based on the available bandwidth. Many of its titles, including Netflix original series and films, are available in high-definition with Dolby Digital Plus 5.1 surround sound and some in Ultra HD 4K. Advanced recommendation technologies with up to five user profiles help members discover entertainment they will love.

Merrill Lynch has set its price target at $450. The consensus target is $382.97, and the shares closed most recently at $354.61.

Make no mistake, the political rhetoric will get louder, especially next year. Some of these companies actually may have to spin-off certain business silos. However, the fact remains that they all dominate their specific technology and internet silos in various ways, and while they may remain volatile, for those with higher risk tolerance they offer very good entry points, especially on any forward weakness.