Facebook is worth more than one of the largest and most recognizable entertainment companies on earth Disney. And, it may be headed up even more.
It may have been just a file on a college kid's computer just a decade ago but now Facebook is worth more than 90 year-old entertainment giant, Disney.
Yes, you read that correctly.
The company that gave the world Mickey Mouse and Disneyworld is worth less than a company built on pokes, annoying game requests, and sketchy privacy policies. The financial markets now values the modern equivalent of vacation slideshows shown to captive dinner party guests more than it does one of the largest film studios in the world.
|Last 12 reported months data||Disney|
|Market cap||$123.8 billion||$134.0 billion|
|Revenues||$45.0 billion||$6.9 billion|
|Return on assets||7.6%||9.3%|
|Return on equity||14.7%||7.7%|
|Net income||$6.1 billon||$1.0 billion|
|Price to forward earnings||15.6x||48.6x|
Thus, even though Disney has six and a half times more revenues, twice the return on equity, and six times more net income, the markets are siding with the Zuck House (or is that Zuck Dorm Room) over the Mouse House. Even the price-to-forward expected earnings for Facebook is three times that of Disney.
And now two reports say that Facebook is headed higher, in part because the social media site announced it will start selling auto-playing video ads this week.
(Read more: Facebook to roll out video advertising in test)
Analysts Brian Nowak and Michael Constantini of Susquehanna Financial Group raised their price target for Facebook to $68 per share, saying, "We upgrade FB to Positive as it is set to deliver positive revisions and concerns about "ad load capping" and "teen" comments are overblown". In other words, they think Facebook won't scare away its user with too many ads and teens aren't running away from the site.
Meanwhile, analysts Jason Helfstein and Jed Kelly at Oppenheimer have upped their price target to up to $62 for Facebook, saying newly-acquired Instagram is worth $16 billion (it was acquired for $1 billion back in May). As of midday Tuesday, Facebook was trading at $54.75 and shares have more than doubled since the start of the year.
CNBC contributor Gina Sanchez, founder of Chantico Global, says Facebook has been doing a good job of making money off of its users and that will continue with the new video ads.
"They have over 1 billion active monthly users," notes Sanchez. "Obviously, these video ads are part of its continued monetization of that massive base. When you have that many eyeballs, you can definitely monetize that through advertising."
Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, is also positive on Facebook, basing his view on the technical patterns that have formed in the stock's chart.
"I love this chart," says Ross, who sees a 20% upward move in the stock. Ross is also enthusiastic about the charts because it is "a textbook lesson in the 'false break'". The stock had traded within a well-defined trend channel but break below its support at $45 less than a month ago. However, it quickly snapped back up.
"False breaks lead to fast moves in the opposite direction when people get caught leaning the wrong way," says Ross. "That's exactly what happened with Facebook."
To see the rest of Sanchez's fundamental analysis and Ross' technical analysis on what's next for Facebook, watch the video above.
More from Talking Numbers:
- Arts & Entertainment