Facebook is the new Coca-Cola!

This week was the week of Facebook. Everywhere you turned, you saw Mark Zuckerberg's emotion-free, calm, focused, and some may say Android-like face answering the politicians' questions. While the questions covered a wide range of topics, I couldn't help but think about how Facebook has reached the Coca-Cola status! Who could have imagined Facebook to be so widely used that the U.S. government spends two full days understanding how it works, and what it does! 

Like many others, you are most likely confused by my comparison of Facebook and Coca-Cola. The two companies are very different in many ways. If you ask some of the hard-core stock market investors, they laugh at the mere notion of comparing Facebook with Coca-Cola. How could these two be comparable? One is a "growth" stock, and the other is a stable, dividend-paying company. One makes money off people's data; the other quenches the world's thirst. What's the catch?

Where Facebook and Coca-Cola meet is their strength as a business and their inevitable status in the lives of billions around the world. Once a company reaches the inevitable status, it is hard to imagine it will lose its market leadership in years to come. ​

Here is what Warren Buffett wrote about Coca-Cola in 1996 as he was describing the company becoming an inevitable: ​

Now, replace Coca-Cola [and Gillete] with Facebook:

"Companies such as Facebook might well be labeled "The Inevitables."  Forecasters may differ a bit in their predictions of exactly how much digital advertising business this company will be doing in ten or twenty years. Nor is our talk of inevitability meant to play down the vital work that the company must continue to carry out, in such areas as user satisfaction, data protection, regulatory compliance, and platform innovation. In the end, however, no sensible observer - not even the company' most vigorous competitors, assuming they are assessing the matter honestly - questions that Facebook will dominate its field worldwide for an investment lifetime. Indeed, its dominance will probably strengthen. The company has significantly expanded its already huge shares of the market during the past ten years, and all signs point to their repeating that performance in the next decade."

To complement uncle Warren's description above, here are a few facts to feel the real power of Facebook as an economic engine in comparison with the good old Coca-Cola. This is not meant to bash Coca-Cola, but to showcase the power of Facebook:

• The two companies almost spend the same amount of money on operating expenses. (~ $15 Billion)
• But, Facebook makes $40 Billion in revenue, whereas Coca-Cola makes $35 (So, Facebook is $5 billion more efficient)

It's not over yet!

• While Facebook has no debt, Coca-Cola has $48 Billion in debt!
• And, both companies have about the same amount of cash at hand. 
• Last, but not the least, even though introducing a bit healthier drink shows the extent of Coca Cola's innovation, take a look at how Facebook and it's Facebook Spaces' product is innovating the realm of communications with the use of new technologies such as Virtual Reality in the ways that once was only imaginable in Sci-Fi movies.

With that in mind, this week's featured stock is Facebook which by the way has entered into an undervalued price range as the result of the recent data breach controversies. 

That's it, folks, for this week's edition of Stock Card Weekly! If you've made it so far and read through the whole newsletter, I want to let you in on an exciting Stock Card news. We are getting out of Open Beta very soon. Several improvements and automations have been in the works, and in the next week or so, you will get to experience those changes first hand. Many of you have already sent me your thoughts and ideas as to how we can make Stock Card better. You can still do so by either sending me an email or joining our Intelligent Investing Facebook group. Hope to hear your suggestions and ideas about how Stock Card can be a better investment tool specifically for you!

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