Facebook FBcontinues to enjoy the support of long-term investors. The recent disclosure of Sequoia Fund buying a minor stake in the company makes it more evident.
In a letter to shareholders, the investment committee of the fund mentioned that “Though Facebook has unquestionably committed sins for which it must now atone, we believe it remains a far more competitively advantaged, economically attractive and faster-growing enterprise than the average American business”.
The company has been facing a continuous backlash from all quarters post revelation of the data scandal, which affected 87 million users. As a result, shares of Facebook have lost nearly 9% since Mar 19 as investors became more concerned about the company’s performance.
However, the recent move of Sequoia shows that not all is lost for the company given its strong fundamentals as well as the recent measures to uphold security on its platform. The rising controversy has made the stock cheaper than usual, which Sequoia seems to cash in on.
Notably, Facebook has an average trailing 12-month P/E ratio of 25.56, way below the industry’saverage of 28.24.