Facebook is an American company operating from Menlo Park, California. It is a company that enables people to establish social networks via the internet. Its services are online which are available through its website or mobile application. It was launched as a website on February 2004, and its founder is Mark Elliot Zuckerberg together with friends at Harvard College. The following are the several measures that those who are interested in buying Facebook stocks should consider. User Metrics The company relies on advertising for revenue. It is, therefore, necessary to evaluate the trends regarding user growth. The company reported it had two billion and seventy million users who log into the site every month by the end of its third quarter …show more content…
However, it has managed to buy many of its competitors such as Instagram and WhatsApp. Its cash flow is not affected by the competition. It also makes an effort to buy out upcoming companies with an aim o increasing services it offers and as a result increase profit. Expenses Facebook has been had a growing revenue curve, and it is also important to find out how its expenses are behaving. Subtracting expenses from revenue gives an income of the company. According to the report the company has been providing, there is an increase in expenses, but also the profit is also rising meaning the management has managed to control costs. Financial Health As an investor, it is good to look at the company’s financial statement so that you can know whether it has been able to finance its operation or it depends on debts. Companies have to get a financial assistant, but it must be what the company can repay either by the project it is investing in, or it can pay without affecting its operation and profitability to shareholders. Facebook has a strong balance income statement and balance …show more content…
This is a good indication that the company is continued to grow and its stock will continue growing. The company recorded a growth in total revenue of fifty-one point one percent for the year that ended during it 2017 third quarter. The company has an operating margin of forty-seven point seven during its third-quarter results. This is an exceptional performance need can be attributed to the management effort to manage costs and the sales increase. According to the report for its third quarter in 2017, Facebook had a net margin of forty-one point seven percent for twelve months. Its return on investment was also high and stood at forty-six point three which shows the company has been making a profit out of the capital that has been invested in the company. It is also important to consider the return on equity before investing in stock. Facebook has had a positive Return on Equity. Return on Equity stood at twenty-four point three percent which means the company is making good profits since the return on equity is used to measure the profitability of the