Team 3 report

1. FACEBOOK INC
FBNASDAQ:
November 8, 2015
BUY HOLD SELL
BUYBUYBUYBUYBUY
RATING SINCE 05/19/2015
TARGET PRICE $142.75A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F
Annual Dividend Rate
NA
Annual Dividend Yield
NA
Beta
0.99
Market Capitalization
$245.8 Billion
52-Week Range
$72.00-$110.65
Price as of 11/5/2015
$108.76
Sector: Technology Sub-Industry: Internet Software & Services Source: S&P
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
PAGE 1Report Date: November 8, 2015
FB BUSINESS DESCRIPTION
Facebook, Inc. operates as a social networking
company worldwide. It provides a set of
development tools and application programming
interfaces that enable developers to integrate with
Facebook to create mobile and Web applications.
STOCK PERFORMANCE (%)
3 Mo. 1 Yr. 3 Yr (Ann)
Price Change 12.77 45.34 72.33
GROWTH (%)
Last Qtr 12 Mo. 3 Yr CAGR
Revenues 40.52 42.29 65.69
Net Income 11.16 2.38 537.50
EPS 3.33 -5.72 362.61
RETURN ON EQUITY (%)
FB Ind Avg S&P 500
Q3 2015 6.82 12.98 12.91
Q3 2014 13.00 13.52 14.28
Q3 2013 7.97 14.58 13.75
P/E COMPARISON
109.86
FB
49.90
Ind Avg
22.13
S&P 500
EPS ANALYSIS¹ ($)
2015
Q30.31
Q20.25
Q10.18
2014
Q40.25
Q30.30
Q20.30
Q10.25
2013
Q40.20
Q30.17
Q20.13
Q10.09
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
Weekly Price: (US$) SMA (50) SMA (100) 2 Years1 Year
2013 2014 2015
40
60
80
100
120
140
160
TARGET PRICE $142.75TARGET PRICE $142.75TARGET PRICE $142.75TARGET PRICE $142.75TARGET PRICE $142.75
Rating History
HOLD BUY
0
200
400
600
Volume in Millions
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
RECOMMENDATION
We rate FACEBOOK INC (FB) a BUY. This is driven by a few notable strengths, which we believe should have
a greater impact than any weaknesses, and should give investors a better performance opportunity than most
stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth,
largely solid financial position with reasonable debt levels by most measures, good cash flow from
operations, growth in earnings per share and expanding profit margins. We feel its strengths outweigh the
fact that the company has had somewhat disappointing return on equity.
HIGHLIGHTS
The revenue growth came in higher than the industry average of 15.1%. Since the same quarter one year
prior, revenues rose by 40.5%. This growth in revenue appears to have trickled down to the company's bottom
line, improving the earnings per share.
FB's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that
there has been very successful management of debt levels. Along with this, the company maintains a quick
ratio of 9.96, which clearly demonstrates the ability to cover short-term cash needs.
Net operating cash flow has significantly increased by 75.64% to $2,192.00 million when compared to the
same quarter last year. In addition, FACEBOOK INC has also vastly surpassed the industry average cash flow
growth rate of 3.03%.
FACEBOOK INC's earnings per share improvement from the most recent quarter was slightly positive. The
company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel
that this trend should continue. During the past fiscal year, FACEBOOK INC increased its bottom line by
earning $1.10 versus $0.59 in the prior year. This year, the market expects an improvement in earnings ($2.16
versus $1.10).
The gross profit margin for FACEBOOK INC is currently very high, coming in at 94.80%. It has increased from
the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit
margin of 19.90% trails the industry average.

2. FACEBOOK INC
FBNASDAQ:
November 8, 2015
Sector: Technology Internet Software & Services Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
Beta
0.99
Market Capitalization
$245.8 Billion
52-Week Range
$72.00-$110.65
Price as of 11/5/2015
$108.76
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
PAGE 2Report Date: November 8, 2015
PEER GROUP ANALYSIS
REVENUE GROWTH AND EBITDA MARGIN*
EBITDA Margin (TTM)
RevenueGrowth(TTM)
0%160%
70%-10%
FAVORABLE
UNFAVORABLE
VRSNVRSNVRSNVRSNVRSN
BIDUBIDUBIDUBIDUBIDU
GOOGLGOOGLGOOGLGOOGLGOOGL GOOGGOOGGOOGGOOGGOOG
YHOOYHOOYHOOYHOOYHOO
LNKDLNKDLNKDLNKDLNKD
BABABABABABABABABABA
TWTRTWTRTWTRTWTRTWTR
NTESNTESNTESNTESNTES
AKAMAKAMAKAMAKAMAKAM
FBFBFBFBFB
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $9.1 Billion and $474.3 Billion.
Companies with NA or NM values do not appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
REVENUE GROWTH AND EARNINGS YIELD
Earnings Yield (TTM)
RevenueGrowth(TTM)
0%160%
5%-3%
FAVORABLE
UNFAVORABLE
VRSNVRSNVRSNVRSNVRSN
BIDUBIDUBIDUBIDUBIDU
GOOGLGOOGLGOOGLGOOGLGOOGL GOOGGOOGGOOGGOOGGOOG
YHOOYHOOYHOOYHOOYHOO
LNKDLNKDLNKDLNKDLNKD
BABABABABABABABABABA
TWTRTWTRTWTRTWTRTWTR
NTESNTESNTESNTESNTES
AKAMAKAMAKAMAKAMAKAM
FBFBFBFBFB
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between 4.3% and
157.1%. Companies with NA or NM values do not
appear.
INDUSTRY ANALYSIS
The US internet software and services industry includes companies that develop and market internet
software and provide services such as online databases, interactive services, web address registration,
database construction, and website design. The industry is highly competitive and characterized by rapid
technological changes, evolving industry standards, and frequent new product and service developments.
The industry includes about 4,000 companies, with combined annual revenue of approximately $30 billion.
Google (GOOG), eBay (EBAY), and Yahoo (YHOO) are major players.
Over the past decade, consumers have embraced the online channel to purchase goods and services. The
number of worldwide consumers becoming more comfortable in using the internet to purchase goods or
services is expected to continue to grow. Increasing online availability of services and declines in broadband
tariffs and associated hardware prices will continue to drive robust growth.
There is an on-going trend toward industry consolidation as leading companies seek access to new
technology and customer bases developed by recent start-ups in order to increase market share. Recent
acquisitions by large and well-capitalized technology companies have altered the competitive landscape.
Profitability of individual companies depends largely on volume and efficient operations and small companies
compete by serving niche segments or by providing technical expertise.
The industry is highly competitive, particularly in the advertising segment. This competition has intensified as
a result of consolidation and low entry barriers, which has caused price reductions for advertising space,
implying a drop in margins. Another challenge facing the industry is related to secure transmission of
personal information over public networks. These networks are vulnerable to unauthorized access by
hackers and computer viruses. Allowing unauthorized access to users’ information subjects a company to
reputational, financial, and legal risks.
Looking forward, companies’ success will depend on their ability to adopt rapidly evolving technologies, alter
services to meet industry standards, and improve the performance and reliability of services. Investment in
research and development will continue to be an integral part of company and industry success.
PEER GROUP: Internet Software & Services
Recent Market Price/ Net Sales Net Income
Ticker Price ($)Company Name Cap ($M) Earnings TTM ($M) TTM ($M)
FB 108.76FACEBOOK INC 245,769 109.86 15,938.00 2,828.00
VRSN 81.30VERISIGN INC 9,066 32.01 1,042.66 339.18
BIDU 198.91BAIDU INC 54,861 37.46 9,705.78 1,911.60
GOOGL 760.67ALPHABET INC 474,254 35.78 71,763.00 16,182.00
GOOG 731.25ALPHABET INC 474,254 34.44 71,763.00 16,182.00
YHOO 35.12YAHOO INC 33,062 140.48 4,947.98 242.25
LNKD 249.74LINKEDIN CORP 28,836 NM 2,772.45 -147.82
BABA 85.38ALIBABA GROUP HLDG 214,511 22.23 13,655.57 9,832.56
TWTR 28.66TWITTER INC 19,383 NM 1,986.64 -556.15
NTES 144.87NETEASE INC 19,061 23.11 2,388.23 825.69
AKAM 61.70AKAMAI TECHNOLOGIES INC 10,983 33.72 2,154.58 330.09
The peer group comparison is based on Major Internet Software & Services companies of comparable size.

3. FACEBOOK INC
FBNASDAQ:
November 8, 2015
Sector: Technology Internet Software & Services Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
Beta
0.99
Market Capitalization
$245.8 Billion
52-Week Range
$72.00-$110.65
Price as of 11/5/2015
$108.76
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
PAGE 3Report Date: November 8, 2015
COMPANY DESCRIPTION
Facebook, Inc. operates as a social networking company
worldwide. It provides a set of development tools and
application programming interfaces that enable
developers to integrate with Facebook to create mobile
and Web applications. The company's products include
Facebook mobile app and Website that enable people to
connect, share, discover, and communicate with each
other on mobile devices and personal computers;
Messenger, a mobile-to-mobile messaging application
available on Android, iOS, and Windows phone devices;
Instagram, a mobile application that enable people to
take photos or videos, customize them with filter effects,
and share them with friends and followers in a photo
feed or send them directly to friends; and WhatsApp
Messenger, a cross-platform mobile messaging
application that allows people to exchange messages on
iOS, Android, BlackBerry, Windows phone, and Nokia
devices. As of December 31, 2014, it had 1.19 billion
monthly active users and 890 million daily active users.
Facebook, Inc. was founded in 2004 and is
headquartered in Menlo Park, California.
FACEBOOK INC
1601 Willow Road
Menlo Park, CA 94025
USA
Phone: 650-543-4800
http://www.facebook.com
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of FB shares. It is provided in order to give you a deeper understanding of our rating
methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
FACTOR SCORE
Growth out of 5 stars5.0
Measures the growth of both the company's income statement and
cash flow. On this factor, FB has a growth score better than 90% of the
stocks we rate.
weak strong
Total Return out of 5 stars5.0
Measures the historical price movement of the stock. The stock
performance of this company has beaten 90% of the companies we
cover.
weak strong
Efficiency out of 5 stars4.0
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 70% of the companies we review.
weak strong
Price volatility out of 5 stars5.0
Measures the volatility of the company's stock price historically. The
stock is less volatile than 90% of the stocks we monitor.
weak strong
Solvency out of 5 stars5.0
Measures the solvency of the company based on several ratios. The
company is more solvent than 90% of the companies we analyze.
weak strong
Income out of 5 stars0.5
Measures dividend yield and payouts to shareholders. This company
pays no dividends.
weak strong
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.

4. FACEBOOK INC
FBNASDAQ:
November 8, 2015
Sector: Technology Internet Software & Services Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
Beta
0.99
Market Capitalization
$245.8 Billion
52-Week Range
$72.00-$110.65
Price as of 11/5/2015
$108.76
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
PAGE 4Report Date: November 8, 2015
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
0.67
Q4 FY15
2.16 E
2015(E)
2.83 E
2016(E)
INCOME STATEMENT
Q3 FY15 Q3 FY14
Net Sales ($mil) 4,501.00 3,203.00
EBITDA ($mil) 1,945.00 1,704.00
EBIT ($mil) 1,459.00 1,415.00
Net Income ($mil) 896.00 806.00
BALANCE SHEET
Q3 FY15 Q3 FY14
Cash & Equiv. ($mil) 15,834.00 14,250.00
Total Assets ($mil) 46,469.00 24,188.00
Total Debt ($mil) 126.00 278.00
Equity ($mil) 41,420.00 21,238.00
PROFITABILITY
Q3 FY15 Q3 FY14
Gross Profit Margin 94.80% 91.23%
EBITDA Margin 43.21% 53.20%
Operating Margin 32.42% 44.18%
Sales Turnover 0.34 0.46
Return on Assets 6.08% 11.41%
Return on Equity 6.82% 13.00%
DEBT
Q3 FY15 Q3 FY14
Current Ratio 10.68 13.06
Debt/Capital 0.00 0.01
Interest Expense NA NA
Interest Coverage NA NA
SHARE DATA
Q3 FY15 Q3 FY14
Shares outstanding (mil) 2,814 2,608
Div / share 0.00 0.00
EPS 0.31 0.30
Book value / share 14.72 8.14
Institutional Own % NA NA
Avg Daily Volume 30,321,569 27,893,934
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
FINANCIAL ANALYSIS
FACEBOOK INC's gross profit margin for the third quarter of its fiscal year 2015 is essentially unchanged when
compared to the same period a year ago. Sales and net income have grown, and although the growth in
revenues has outpaced the average competitor within the industry, the net income growth has not.
FACEBOOK INC is extremely liquid. Currently, the Quick Ratio is 9.96 which clearly shows the ability to cover
any short-term cash needs. The company's liquidity has decreased from the same period last year.
At the same time, stockholders' equity ("net worth") has greatly increased by 95.02% from the same quarter
last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial
difficulties in the near future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.

5. FACEBOOK INC
FBNASDAQ:
November 8, 2015
Sector: Technology Internet Software & Services Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
Beta
0.99
Market Capitalization
$245.8 Billion
52-Week Range
$72.00-$110.65
Price as of 11/5/2015
$108.76
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
PAGE 5Report Date: November 8, 2015
RATINGS HISTORY
Our rating for FACEBOOK INC has not changed
since 5/19/2015. As of 11/5/2015, the stock was
trading at a price of $108.76 which is 1.7% below its
52-week high of $110.65 and 51.1% above its
52-week low of $72.00.
2 Year Chart
2014
$60
$80
$100
$120
BUY:$80.63
HOLD:$50.10
MOST RECENT RATINGS CHANGES
Date Price Action From To
5/19/15 $80.63 Upgrade Hold Buy
11/5/13 $50.10 No Change Hold Hold
Price reflects the closing price as of the date listed, if available
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
(as of 11/5/2015)
38.98% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
33.28% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
27.74% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
VALUATION
BUY. FACEBOOK INC's P/E ratio indicates a significant premium compared to an average of 49.90 for the
Internet Software & Services industry and a significant premium compared to the S&P 500 average of 22.13.
For additional comparison, its price-to-book ratio of 7.39 indicates a significant premium versus the S&P 500
average of 2.79 and a significant premium versus the industry average of 5.54. The price-to-sales ratio is well
above both the S&P 500 average and the industry average, indicating a premium. Upon assessment of these
and other key valuation criteria, FACEBOOK INC proves to trade at a premium to investment alternatives
within the industry.
1 2 3 4 5Price/Earnings
premium discount
FB 109.86 Peers 49.90
• Premium. A higher P/E ratio than its peers can
signify a more expensive stock or higher growth
expectations.
• FB is trading at a significant premium to its peers.
1 2 3 4 5Price/CashFlow
premium discount
FB 43.21 Peers 27.72
• Premium. The P/CF ratio, a stock’s price divided by
the company's cash flow from operations, is useful
for comparing companies with different capital
requirements or financing structures.
• FB is trading at a significant premium to its peers.
1 2 3 4 5Price/Projected Earnings
premium discount
FB 38.43 Peers 24.14
• Premium. A higher price-to-projected earnings ratio
than its peers can signify a more expensive stock
or higher future growth expectations.
• FB is trading at a significant premium to its peers.
1 2 3 4 5Price to Earnings/Growth
premium discount
FB 1.15 Peers 0.35
• Premium. The PEG ratio is the stock’s P/E divided by
the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
• FB trades at a significant premium to its peers.
1 2 3 4 5Price/Book
premium discount
FB 7.39 Peers 5.54
• Premium. A higher price-to-book ratio makes a
stock less attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
• FB is trading at a significant premium to its peers.
1 2 3 4 5Earnings Growth
lower higher
FB -5.72 Peers 6.51
• Lower. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
• However, FB is expected to significantly trail its
peers on the basis of its earnings growth rate.
1 2 3 4 5Price/Sales
premium discount
FB 19.20 Peers 9.79
• Premium. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
• FB is trading at a significant premium to its industry.
1 2 3 4 5Sales Growth
lower higher
FB 42.29 Peers 38.52
• Average. Comparing a company's sales growth to
its industry helps to determine if the company is
adding or losing market share.
• FB is keeping pace with its peers on the basis of
sales growth.
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
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