Facebook is still a stellar company, this portfolio manager says

Judging by the number of gloom and doom headlines in the media these days concerning Facebook (Facebook Stock Quote, Chart NASDAQ:FB), you’d be forgiven for thinking that the company and the stock were both falling off a cliff.

But while FB did suffer a few deep plunges this year, investors should keep their eyes on the prize, in this case, the company’s still-spectacular fundamentals, says Mohsin Bashir of JM Fund Management.

To anyone other than the odd hermit and/or luddite, Facebook’s troubles are by now common knowledge, as the social media giant struggles to come to grips with its problematic involvement in matters of human rights and social justice. From concerns over fake news and foreign influence in elections to privacy issues related to the Cambridge Analytica scandal to ongoing (and likely eternal) criticism over its censorship policies and practices, there’s a lot for Mark Zuckerberg and Co. to worry about.

Here’s a recent sampling: yesterday, Facebook representatives announced that it would be cutting back its on-site support staff available to political campaigns, part of the company’s renewed efforts to avoid being embroiled in future election controversy.

Those efforts were recently on display in Vancouver, as the Globe and Mail reported that Facebook had shut down at least two accounts connected to the city’s upcoming civic election —one promoting a mayoral candidate and another critical of a separate mayoral candidate— that the company said had violated its authenticity and spam policies which bar users from creating fake accounts to impersonate others.

News also broke this week that the European Union was looking into sanctions against Facebook over what the EU calls its misleading terms and conditions. Add to that shareholder worries which came to a head in July as investors reacted to a seeming slowdown in growth from the company.

Is Facebook a mess? Not really, says Bashir, chief operating officer at JM Fund Management.

“The best way to say it is to quote a line from Gladiator, ‘You win the crowd, you win your freedom’ — Facebook has won the crowd, effectively, with two of the best Internet assets, Facebook and Instagram,” says Bashir, to BNN Bloomberg.

Facebook stock is compelling, Bashir says

“They’ve made headlines not only through the Cambridge Analytica scandal and Mark Zuckerberg becoming a little more of a statesman but also by having one of the biggest market drops after their [2018] Q2 earnings,” he says. “I think the shake-out has really taken place and expectations have been sobered now and you’ve still got a company that’s generating $20 billion in earnings, has no debt, has an ROE of 20 per cent and is trading at a forward multiple of 20 per cent.”

“So, the risk/reward is pretty good there,” says Bashir.

So far in 2018, Facebook’s share price is down 7 per cent. In midday trading on Friday, FB sits at $164.57 per share, down a little under one per cent for the day but up almost two per cent for the week.