Together with Captain:
Ok, listen up. No one enjoys FinTwit as much as I do. The problem is that Twitter doesn’t really give us the tools to make FinTwit work for us. Enter Captain.
Captain is a one-stop shop for investment ideas, analysis, charts, and more. They analyze and organize data from FinTwit to easily inform your trade decisions.
Who uses Captain? Experienced, novice, growth, value, small-cap, large-cap, day traders, longs, shorts, options, and every type of trader in between (including meme-stock enthusiasts). Captain caters to a variety of trading styles, preferences, and skillsets.
Think about how much more you can accomplish by being informed and weeding through the BS. Speaking of weeds I need to go check on my garden.
For a limited time, Captain is offering a special discount code for the disciples of Ramp by giving you 25% off an Annual Pro membership by using the code RAMP25.
They are also giving you 95% off the first month for both the Pro and Essential plans with the code CAP95. I think that translates to a few Dogecoin per month.
It’s time to stop scrolling and start trading with Captain at your side.
What Happened This Week:
Facebook’s market cap eclipsed $1 trillion this week after a federal court on Monday dismissed the Federal Trade Commission’s antitrust complaint against Facebook, as well as a parallel case brought by 48 state attorneys general. This dealt a major setback to the agency’s complaint, which could have resulted in Facebook divesting Instagram and WhatsApp. You could make a pretty strong argument that Facebook would not be a $1T company today if they had never purchased Instagram and WhatsApp.
So how did Facebook become a $1T company? To understand how they got there I had to do some due diligence by re-watching The Social Network on Netflix—kidding but it’s still a solid movie that has held up over the past 10 years. If you want a more detailed history of the founding of Facebook you should read Ben Mezrich’s The Accidental Billionaires.
Let’s take a step back and see how we got to now with a brief history of Facebook and its two major acquisitions since becoming a public trading company.
Facebook went public on May 18th, 2012. At the time, it was one of the biggest technology IPOs ever—achieving a market cap of over $100B on the first day of trading.
If you had put $10,000 in Facebook on the IPO, you would have nearly 10x your money today—with the stock essentially doubling every year on average.
Facebook’s ride to $1T wasn’t really all that bumpy compared to other tech stocks. There were only 3 drawdowns more than 30% over the past 9 years—with the deepest drawdown occurring months after the IPO when it dropped more than 50% from the highs. The other 2 drawdowns were caused by the Cambridge Analytica scandal in 2018 and the pandemic scare in 2020 which brought down every other stock.
Two of the biggest themes I could recall from the Facebook IPO were concerns around monetizing mobile users and how they just paid $1B for Instagram, an app that put filters on photos and had made precisely $0 in revenue. Zuck figured out how to monetize both of these successfully, with Instagram arguably being the greatest acquisition of all time.
On October 3rd, 2012, just eight years after the company was founded in a university dorm room, Facebook reported that it had more than one billion active daily users—with a large percentage (~70%) coming from mobile. There were concerns that Facebook wouldn’t be able to monetize their mobile users as well as the desktop users. Zuck was unfazed and stuck to the plan of dominating mobile as noted in a conference call.
“People who use our mobile products are more engaged, and we believe we can increase engagement even further as we continue to introduce new products and improve our platform. At the same time, we are deeply integrating monetization into our product teams in order to build a stronger, more valuable company.”
As Facebook continued steamrolling ahead with its mobile ad business, it also kept on the gas pedal with M&A. In November 2013, Zuck offered a measly $3B to purchase Snapchat. Media reports at the time suggested that Snapchat CEO and founder Evan Spiegel rejected the deal in the hope that the company could secure an even higher valuation the following year. This turned out to be a great decision as Snapchat is now valued at over $100B and becoming a behemoth in its own right.
After being ghosted by Snapchat (pun intended), Zuck set his eyes on WhatsApp, a text messaging app used widely across the globe. In February 2014, Facebook announced that it had reached an agreement with WhatsApp to buy the messaging app for $4 billion in cash, plus approximately $12 billion in Facebook shares. This acquisition further cemented Zuck’s intent on expanding its mobile userbase globally and dominating the sector.
For the next 4 to 5 years, Facebook made a few more minor acquisitions and just kept grinding away at getting more users on their platforms, expanding globally, and monetizing every single eyeball.
By mid-year 2018, Instagram officially had over 1 billion users and started to dwarf the growth rate of the parent company app—as Facebook started to become popular with the olds and Instagram became more popular with the youths. This was key for Facebook, as the company could now capture ad revenue from every demographic globally.
In 2020, WhatsApp reached 2 billion users, showing again that the company’s reach spread across far more than just Facebook’s 2.85 billion and Instagram’s 1 billion users.
Fast-forward to today and you can see how Facebook has dominated the social media landscape since becoming a publicly-traded company. They achieved an enormously large userbase via their flagship product, monetized those eyeballs, and began picking off smaller companies in sub-verticals that fit into Zuck’s ultimate vision of taking over the world. Hence why Facebook recently had to deal with the FTC on antitrust complaints.
I’d postulate that very few people believed that Facebook would ever become a $1T company—myself included. I know I was extremely skeptical like others around the IPO but naively assumed that Facebook would just eventually die once all of the young people left the platform.
The takeaway: Facebook continues to perform at the highest level. TTM revenues are over $94B and they’ve achieved an average gross operating margin of 81% since the IPO. Commerce and payments are Facebook’s next targets. And with billions of users, the sky is the limit. Zuck will not stop until he monetizes every eyeball on the planet. Hate him or love him, Zuck has built (and stolen many ideas) something incredible that no one thought was possible. Don’t doubt the Zuck.
Performance Update:
Now let’s see how the People’s Portfolio did this week…
We rattled off six straight weeks of gains as the benchmark continues to rally day after day. The S&P 500 is currently on a 7-day win streak and up 9 out of the last 10 days—closing at fresh all-time highs on Friday heading into the holiday weekend.
On Friday, we voted Penn National Gaming (PENN) to remain in the portfolio. PENN has been our 2nd worst performer on the year (behind COIN), currently -16.75% since our first purchase 10 weeks ago.
The S&P Biotech ETF (XBI) is on the chopping block next week for the 1st time. We’re currently holding onto a -0.19% loss over the past 9 weeks.
Our portfolio is currently -2.19% on the year and we’re slowly getting close to getting back to even on the year. Just need a few more rippers and we’ll get back.
Keep an eye out for the new Twitter poll every Friday. Follow along in real-time with nearly 300,000 others on Public.
Portfolio News Highlights:
The biggest stories affecting our portfolio this week:
Coinbase Global enters Japan, poised to offer five cryptocurrencies (SA)
Arm CEO says Nvidia merger better than going public (Reuters)
Disney+ Subscriber Growth Losing Momentum: Report (IBD)
Why the Earnings Surprise Streak Could Continue for Square (SQ) (Zacks)
The Economy of Canada: An Explainer (Investopedia)
Here's Why Investors Should Retain Penn National (PENN) Stock (Zacks)
What Else We’re Reading:
Blogs/Articles:
Can Investors Beat Active Mutual Funds with Cheap ETFs, YUP! - Tommi Johnson, PhD (Alpha Architect)
A Framework for The Metaverse - Matthew Ball (MatthewBall.vc)
The economics of dollar stores - Zachary Crockett (The Hustle)
Books:
Atomic Habits - James Clear
Need new reading material? Visit my Amazon page for my most purchased book recommendations.