This Facebook pitch deck illustrates the vast potential for investors, institutional and retail alike, to capitalize on the upside of the social media giant. We dissect the impact of Facebook's latest acquisitions, current and future growth rates, the NPV of the acquisitions and what it all means for Facebook shareholders going forward.

1. Facebook Inc.
(NASDAQ: FB)
Value Pitch
Paul Sigrist
October 20,2014

2. Agenda
• Company Background
• Business Opportunities
• Financials
• Valuation
• Recommendation

3. Company Background

4. Line of Business
• "Facebook is the best company, and the largest,
in the social media arena." - Jim Cramer
• Technology, social media, marketing
• Networking, communication

5. Leadership
Mark Zuckerberg (Age 30) Chairman and CEO
Mark Zuckerberg is responsible for the direction and
product strategy for Facebook since 2004
Sheryl Sandberg (Age 45) Chief Operating Officer
Sheryl oversees the firm's business operations including
sales, marketing, business development, legal, HR, and
communications.

6. Leadership
Dave Wehner (Age 47) Chief Financial Officer
Dave Webner joined Facebook in 2012, and he now
leads the finance, facilities and information technology
teams.
Mike Schroepfer (Age 39) CTO and VP of Engineering
Mike Schroepfer heads the teams which build products,
services and infrastructure.
Chris Cox (Age 32) Chief Product Officer
Chris Cox leads Facebook's product management,
design and marketing functions.

7. Significant Developments
• Acquisition of Branch, WhatsApp, Oculus VR, ProtoGeo
Oy, Private Core and WaveGroup Sound in past 8 months.
• Facebook announced international launch of auto-play
ads in May.
• Facebook now allows younger users (12+) to sign-up for
the social media site while allowing parents to monitor
content.
• Facebook is attempting to bring internet access to
developing nations (India) through acquisitions, product
development and innovation.

8. Business Opportunities

9. Opportunities
• FB currently has over 1.2 billion MAU and expanding into
India, the Middle East and other developing markets.
• FB is beginning a new series of short-films to air on the
site, which should lead to a more pronounced role in the
film/entertainment industry.
• Providing developing nations internet capabilities
creates an additional revenue stream for Facebook.
• The hiring of PayPal's President provides Facebook an
expert payment system developer and creator.

12. Financials

13. Key Metrics
FB TWTR AAPL
Mkt Cap $204.6B $30.8B $613.58B
Current Price $78.69 $50.70 $102.47
Ownership 51% Intl - 62% Intl
P/E 83.64 528.13 15.51
Op Margin 43.5% -87.51% 28.84%
Net Profit Margin 23.78% - 20.10
ROE 15.51% -45.42% 31.56%
PEG 1.34 5.62 0.87
Earnings Growth
YoY
137.50% - 12.30%

14. Stock Performance

15. Insider Trading

16. Valuation

17. Key Acquisition NPV
• Branch acquisition (web conversation platform) - $15M cost with
$1B NPV on 10 year basis.
• WhatsApp acquisition (mobile instant messaging) - $19B cost
with $161B NPV on 10 year basis averaging $1.70 rev per user.
• Oculus VR (virtual reality technology) - $2B cost with $3.5B NPV
on 10 year basis.
• ProtoGeo Oy (fitness tracking app) - Undisclosed cost with
$1.5B NPV on 10 year basis.
• WaveGroup Sound (sound studio) - Undisclosed cost with $1.2B
NPV on 10 year basis.

18. Impact of Recent
Acquisitions
• Facebook's five most impactful acquisitions in just the past 10
months provides FB with a NPV of $168.2B for just $21B in cost.
• The combination of the acquisitions of Branch and WhatsApp
creates dominance for FB in the affordable/"free" mobile
communication space.
• Facebook is positioned through these acquisitions to dominate the
developing and emerging market social media and mobile
communication spaces.
• Developing nations provide FB with access to 2B more MAU, a
40% conversion rate over the next 10 years would add an
additional $7B annually to FB revenue at $1.70 per user (below
current specs).

19. • In fiscal 2013 Facebook reported revenues of
$7.87B.
• By 2018, as a result of recent acquisitions,
Facebook's revenue will climb to $13.5B.
• By 2024, as a result of recent acquisitions,
Facebook's revenue will reach $24.2B.
• Net income will surpass $10B by 2019 based on
the 123% net income growth over the past three
years and recent acquisition impact.

20. Key Assumptions
• Facebook is able to maintain a minimum 25% revenue growth rate
over the next 5 years.
• Facebook is able to maintain at least a revenue of $1.70 per user
over the next 10 years. (Currently generating $2.24 per user.)
• Facebook is able to maintain a minimum of 45% market share in the
social media industry. (FB has 72.53% market share as of Aug. '14.)
• Facebook is able to maintain a minimum of 5% of all mobile ad
market share. Facebook's market share is currently 7.79% and
grew by 40% on a YoY basis.
• The mobile ad market continues to grow more than 5% annually,
grew by more than 15% from 2013 to 2014.

21. Scenario Price
• Bearish price: $88.93 (87.65 - $90.21)
• Revenue growth fails to maintain 25% growth on a
YoY basis.
• Mobile ad spending industry growth falls to just
10%.
• Facebook revenue per user falls below $2.00.
• Facebook growth in the mobile ad space stagnates.

22. • Bullish Price: $112.04 ($109.76 - $114.31)
• Able to sustain current revenue growth.
• Able to capture 10% of mobile ad spending by mid
2015.
• Installation of further monetization methods of
WhatsApp by the end of Q1 2015, to justify to
shareholders the $19B acquisition in the short-term.
• Monetization of other key acquisitions and further
capitalization of M&A activity.

23. Conclusion

24. Conclusion
• Next generation growth opportunities.
• Well managed
• NPV valuation gives us a price of $100.49 vs.
current price of $78.69; providing a 27.7%
return.
• Q3 Earnings Announcement: October 28
Recommendation: Buy