One billion users a month. That equates to over 33 million per day and nearly 1.4 million every hour. To put that in perspective, it would take three days and six hours to receive the number of users that watched the Super Bowl in 2013. In fact, only 219.4 million American’s watched the Olympics in 2012. It would only take YouTube about six days and 13 hours to acquire that many visits to its site. Ok, I think you get the point. That’s an insane amount of users. Let’s dive in and look at three companies with huge user bases.
Because we already talked a little bit about YouTube above, let’s look at Google Inc (NASDAQ:GOOG) . Google owns YouTube, which released numbers showing the magnitude of this statistic. One in every two people on the Internet will visit the site in a months period of time. Back to a Super Bowl statistic, YouTube will have ten Super Bowl audiences tuned in to its site on a monthly basis.
If YouTube were a country it would be the third largest country in the world — after only China and India. Generation C (the newest generation) spends 74% more time viewing YouTube videos on their smartphones than they did just one year ago. 76% of young adults (ages 18-34) own smartphones, and Google Inc (NASDAQ:GOOG) owns approximately 70% of the global smartphone market share with its Android devices.
So what is Google Inc (NASDAQ:GOOG) doing for investors? Well, how about a stock returning 13.26% YTD and 26.9% over the past year? Gross margins are at 58.9%, and earnings per share have risen annually for ten years. Although its P/E would normally be considered high (25.2), Morningstar shows the industry average at 28.2. The company may not be considered cheap, but it is considered fairly priced by most investors with a FCF yield of 4.98%. Revenues have increased annually since 2003. This is no contemplating matter considering there are an estimated 4 billion views on YouTube every day.
Facebook Inc (NASDAQ:FB) studies have varied a lot depending on what you look at. Some show the social media site with 1 billion total users, and others show 1 billion active monthly users. Many people question this as people create accounts for their pets, relatives that have passed, and their un-born children. The site does however have more than 50 million pages and 10 million aps. The site boasts 618 million daily users, 142 “friends” per user, and over 1.1 trillion likes from the time it was founded. 2.7 billion likes per day occur on this site. Ok, so those numbers are impressive, but what about the investment side of things?
Facebook’s CEO, Mark Zuckerberg, was recently voted as the best CEO of 2013. After an awful IPO, the stock has actually started to rebound in the past few months. It is still down 32.5% over the past year, but is up 2.4% YTD. In three years their revenues have increased nearly 258%, while its gross margins have dropped from 75% to 73.2%. The stock seems to be very expensive as its FCF yield is a dismal .61%. It’s not my ideal investment, but if someone out there finds it suitable for them, more power to them. I, quite honestly, don’t see any competitive advantage over other social media outlets such as Google + or Twitter.
Amazon.com, Inc. (NASDAQ:AMZN) is another company that may not show the best metrics. Amazon will help put YouTube in perspective. As huge as Amazon has become in the retail market, they “only” have 182 million active users. 4% of those users have Amazon Prime memberships, but they account for 10% of the company’s purchases. These Prime members spend an average of nearly twice what non-members spend. Each of these 7.3 million members made Amazon an average of $78 after shipping and licensing costs in 2012. So, YouTube shows 5.5 users to every one of Amazon’s.
I recently saw a unique valuation approach for Amazon. By using cash from operations as the primary figure to placing value on this company, the company is not over-priced at all. In fact, it was slightly under-priced. Amazon is growing so quickly that a lot of their money is poured into capital expenditures.
With this in mind, let’s look at how the company has performed. The company started nineteen years ago and currently holds a market cap of 115.2 billion. Revenues have increased 1,160% in the past decade and over 27% just last year. It shows gross margins of 24.8%, and its stock is up 5.34% YTD. Its total returns have at least doubled that of the S&P 500 over the past 1, 3, 5, and 10 year periods. The chart below shows how these stocks have done over the past year.
The Foolish Conclusion…
YouTube and Facebook have nearly a 6-to-1 ratio of users/customers when compared to Amazon. We’ve seen the crazy numbers and put them into perspective. I still have questions about Facebook and would stay away from it personally. Google and Amazon both appear to be solid companies with great leaders. I would be far more comfortable investing in one of them (or both) than Facebook at this time.
The article One Billion Users Per Month? originally appeared on Fool.com and is written by Tyler Wofford.
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