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What Gene Munster Said About Facebook Inc (FB), Its Payment Business & Its Valuation?

Facebook Inc (NASDAQ:FB) has announced about its mobile payments last week, which bumped up the stock price. Facebook Inc (NASDAQ:FB) stock also hit the new highs last week. Most of this rally was attributed to the mobile payments by analysts. Piper Jaffray’s Gene Munster discussed his outlook on the Facebook Inc (NASDAQ:FB) stock on CNBC and explained why the stock hovers around the all time highs at the moment.

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Munster said that Facebook Inc (NASDAQ:FB)’s mobile payment is just about building engagement. He added that most of the payment that Facebook Inc (NASDAQ:FB) might be able to accommodate is like sending money to friends, and parents sending money to kids, etc. He feels that college kids are going to love this payment mode. He pointed out that Facebook Inc (NASDAQ:FB) is not going to charge for the money transfers and their main objective through this payment is to build user engagement.

Munster thinks that Facebook Inc (NASDAQ:FB) is building a platform where they are not going to make a lot of money initially. With more user engagement and with a user base of 1.4 billion, they can easily monetize the market and make a lot of money later.

There were a lot of questions about Facebook Inc (NASDAQ:FB)’s valuation and their current market cap of $235 billion. Munster thinks that the valuation seems reasonable.

“If you look at the growth rate, in the last quarter they grew at 55%. This year the street is looking for them to grow around 30%. That number is probably a bit low, but the reason why the market cap can be so big is that this story has some huge catalyst this year. It’s pricey, that has been working their advantage. Next year, Instagram, they are not going to monetize Instagram this year, that’s really 2016. Whatsapp is after that, and then there is Oculus thing, which we talk a lot about, but most people don’t talk much about, but this thing is going to be a big deal as far as the augmented reality part of the story. So, I think part of the valuation is the hope of what they can do with the lot of those big catalysts for several years,” Munster said.

Disclosure: None

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