Facebook Inc (FB): All in Good Fun on This Company

Is it better to go with rival Google Inc (NASDAQ:GOOG) than Facebook Inc (NASDAQ:FB)? Google Inc (NASDAQ:GOOG) and Facebook compete for the same ad revenues and the new Facebook phone app does impact them. However, according to Fortune Google still gets the lion’s share of mobile ad revenue. Of course, mobile is where the youth demographic is increasingly hanging out.

Google Inc (NASDAQ:GOOG) vs.Facebook is now the mobile bout of the new century. It’s also a valuation vs growth battle.The Google conglomerate has a lot more going for it than just search and ad revenue although that will have to keep moving (like a shark). Google has other moving parts like mobile wireless devices and other services and apps. In the same CNBC piece Blodget liked Google long term and praised their “aggressive bets” even if it affects margins short term.

Google is off $50 from its all-time high of $844.00. It has a smaller short interest than Facebook and its operating margin at 26.68% is more than twice as high as Facebook Inc (NASDAQ:FB). The forward P/E is 14.85% and analysts expect 14.14% five year EPS growth (yoy).

The kids are growing up

Of course you can’t mention Facebook without LinkedIn Corp (NYSE:LNKD) the career-oriented social networking site. Facebook also competes on the job front through a partnership with Monster Worldwide.

LinkedIn Corp (NYSE:LNKD) has been performing very well up over 60% although it, too, has pulled back. Its P/E is at 899.00 and the forward P/E comes down to 83, giving it the highest forward valuation. Its PEG at 2.14 is also the highest with Google’s at 1.23. Its operating margin is the worst at 5.85%. That said, analysts see the most 5 year EPS growth at 61.33% for LinkedIn Corp (NYSE:LNKD).

What’s an investor to do?

Eventually, the kids will need to create their LinkedIn profile for summer internships and jobs. LinkedIn has the best growth going forward but the valuation is least compelling.

Google remains the value name and its growth at double digits is a good compromise between huge growth and huge P/Es.

Facebook has to do something to retain the core youthful user. Making Facebook fun again is more of a challenge now than monetization. The Home app is a step in the right direction but it’s only a baby step. Wait until Facebook Inc (NASDAQ:FB) reports May 1 and you can see better whether JP Morgan is right about defections especially those of the younger demographic.