Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL) have been incredible investments over the past 10 years, each returning about 600%. Both are among the largest publicly traded companies in the U.S. For investors looking for stable, long-term returns, which is the better investing opportunity?
On this clip from Motley Fool Live recorded on Feb. 3, “The Wrap” host Jason Hall and Fool.com contributors Danny Vena and Brian Stoffel provide insight into what the next 10 years could hold for these tech giants.
Jason Hall: Let’s have a little more grown up conversation about this. Let’s think about the next decade. Because that’s when things start unlocking and I’ll preface it. Then, Brian, I’ll have you go first and then, Danny, I’ll let you have the last word on this one. I’ll preface with this. Thinking about over the next decade, a couple of things.
Start with Apple. The super-cycle for the 5G products, I think it’s going to be enormous over the next three years. The first year for the new series of iPhones, I think it’s going to be huge. The second-year is probably still going to be pretty good. But I think it’s going to continue for the third year as 5G becomes more accessible around the world. I think it’s going to be extended. By the time we get to that third year, it’s not going to be the model.
Phones are going to continue to add other features, but I think 5G is going to be the story for driving Apple’s upgrade cycle, very strong unit sales for at least three years. It’s really going to unlock those services revenues that aren’t things that come through a marketplace where they’re taking a cut of somebody else’s money, is Apple services. I think that’s really going to grow and that’s going to drive a lot of revenue and a lot of margin over the next 10 years.
Tim Cook has proved incredible. As much as they may have lost that innovative edge, I couldn’t think of a better CEO to have come in to have a financial edge in terms of allocating those massive capitals to deliver incredible per share value. He’s been the best CEO of the past decade. I can’t think of anybody else that has been a better CEO at doing that one thing that create a more value for investors than he has. That’s the case for Apple.
The case for Facebook for me over the next decade is the regulatory challenges that could push the company to be broken up. Assuming the company’s broken up and not part sold off to other entities, but if they were to be spun out, Instagram, for example, were to be spun out as a separately traded company, people that bought Facebook today would get enormous benefit from owning multiple social media platforms that are forced to compete against one another to deliver a better product to the users so that the customers, which are the ad buyers, want to pay up for access to those users, you and me, who are the product. That’s the case for Facebook. My guess is it’s probably going to be Facebook over the next 10 years. Brian?
Brian Stoffel: This is one of those things where I sold Facebook because I think it’s unhealthy.
Jason Hall: You and I sold Facebook for the exact same reason.
Brian Stoffel: I just think it’s unhealthy for society the way it’s been used. I don’t think it’s intended to be. I don’t think that was created to be something that’s unhealthy. I just think it’s become something unhealthy. But doesn’t mean that I can’t think that its stock won’t do the best.
Cigarettes are terribly unhealthy and for a really long time, investment in Altria was by far, other than of all thing Southwest Airlines, explain that one to me, the best investment in the S&P 500 over a 20 year timeframe. Why? Because when everybody hates something, whoever’s left is going to get more of the pie because nobody wants to go into that field. When you combine that with unlocking a value we talked about before.
When I do my own anti-fragile ratings, Facebook comes out ahead, and so my money would be on Facebook.
I want to add one other thing, Jason. That is if I were to say what Tim Cook did is that he built moats. It’s not that Steve Jobs wasn’t doing that, he was. But the way that the iCloud became integrated and all of your things ended up syncing with each other. It’s easy for us to forget that 10 years ago, this just started about 10 years ago. It really wasn’t happening the same way it is now.
The reason that those services are such a big deal is not because of the money it brings in, that’s nice. But that’s not the point. The point is that you bought that service and you need to have an Apple product to get it.
Jason Hall: The walled-garden.
Brian Stoffel: Right, exactly. It’s the high switching costs. Tim Cook is the high switching costs CEO and he did that. That’s what he was there to do.
Jason Hall: That’s awesome. Danny, give us the last word on this.
Danny Vena: I think that over the next 10 years, I think there’s the potential for both of these companies, Apple and Facebook, to do incredibly well.
I do think that we have not yet seen all that Apple has to offer yet. I’ll use the example of the iCar. There has been a lot of talk over the years of whether or not Apple was going to get into the manufacturing of a car. It was on again and off again and on again and off again. The latest news is that Apple is partnering with an automaker and they’re going to collaborate on the manufacturing of an electric vehicle. It’s rumors still, we still not had any clarification, we haven’t heard any confirmation from Apple.
But I still think there are areas that Apple is getting into, things that Apple is developing that we don’t yet know.
What we do know is that Apple is going to be an incredible cash machine for the next decade. It’s still going to refresh iPhones several more times. I think the services business is at some point, probably going to surpass the iPhone business. That may be a decade or two down the road, but I think it’s coming.
From the standpoint of Facebook, I think we, as shareholders, and I am still a Facebook shareholder, would derive credible value out of Facebook splitting up into several social media companies.
I don’t know if that’s going to happen, we don’t know what the regulatory environment is going to be and how Facebook will come out of it, but I think that Facebook will still do remarkably well. Yes, it’s going to have some headwinds from Apple. But over the next decade, I’m not planning on selling any of my Facebook shares either and I think that they are both in my portfolio, have been, and will be for the foreseeable future.
Brian Stoffel has no position in any of the stocks mentioned. Danny Vena owns shares of Apple and Facebook. Jason Hall owns shares of Southwest Airlines. The Motley Fool owns shares of and recommends Apple and Facebook. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.
Facebook-Meta Earns the ‘Worst Company of 2021’ Title in This Survey
Facebook parent Meta has been named the Worst Company of the Year (2021) by Yahoo Finance respondents. According to the publication, an “open-ended” survey was published on Yahoo Finance on December 4 and 5, where 1,541 respondents participated. Facebook received 8 percent of the write-in vote, but respondents were seemingly mad about the Robinhood trading app as well. Electric truck startup Nikola, which was named last year’s worst company by the same publication also faced respondents ire.
Yahoo Finance even highlights, “At the same time, some critics, including conservatives, say Facebook over-policed the platform’s speech and stifled their voices.” Critics also blame Facebook and other social media platforms for not curbing hate speech that led to Capitol Building riots.
However, around 30 percent of Yahoo Finance readers said that Facebook or Meta could redeem itself. One respondent suggested that the company could issue a formal apology for negligence and donate a sizable amount of its profits to a foundation to help reverse its harm.
On the other hand, respondents chose Microsoft as the Company of the Year (2021). The Satya Nadella-led company touched the trillion-mark this year and introduced notable upgrades. The most notable is the Windows 11 OS update that succeeds Windows 10.
Facebook pays 1.7 Cr fine to Russia after failing to delete content Moscow deems illegal
In the latest legal tussle with Russia over controversial social media regulation laws, Facebook paid 17 million roubles (Rs 1.7 Crore) for failing to remove content deemed illegal by Moscow. With a threat of potential larger fines looming, Facebook parent company Meta, owned by Mark Zuckerberg, is scheduled to face court next week over repeated violations of Russian legislation on content, Interfax News Agency reported. As per the latest updates, the social media giant could be fined a percentage of its annual revenue.
In October, Moscow sent state bailiffs to enforce the collection of 17 million roubles. Meanwhile, as per Interfax report citing a federal bailiffs’ database, on Sunday, there were more enforcement proceedings against the company. Apart from the popular social media app, Telegram has also paid 15 million roubles in fines for failing to comply with the Russian social media legislations that came into force in 2016.
Facebook pays $53k to Russia for refusing controversial social media laws
It is pertinent to mention that Facebook has locked horns with Moscow earlier in November, resulting in it paying 4 million roubles ($53,000) over its refusal to adhere to Russian data localisation laws, the Moscow Times reported. The Moscow court on November 25 had said that Facebook paid the fine levied in February, following which all proceedings against the US-based social media giant. The payment comes against the litigation filed against the company in 2018, alongside Twitter. The tech companies were also forced to pay an additional 3000 rubles ($40) for failing to comply with user data sharing rules as per the law. The Russian authorities have also previously blocked LinkedIn, owned by Microsoft, for failing to abide by the laws.
Russian social media laws
As per Moscow Times, under the Russian social media regulation laws, all foreign technology companies are required to store data related to Russian customers and users on servers located in Russia. Additionally, the Russian tech companies will also have to share encryption data with the federal authorities as well as record user calls, messages and civil society group conversation records. The apparatus is said to be a severe breach of privacy rights and unfettered back-door access to personal data that could be used to harass Kremlin critics.
Facebook Messenger Is Launching a Split Payments Feature for Users to Quickly Share Expenses
Meta has announced the arrival of a new Split Payments feature in Facebook Messenger. This feature, as the name suggests, will let you calculate and split expenses with others right from Facebook Messenger. This feature essentially looks to bring an easier method to share the cost of bills and expenses — for example, splitting a dinner bill with friends. Using this new Split Payment feature, Facebook Messenger users will be able to split bills evenly or modify the contribution for each individual, including their own.
The company took to its blog post to announce the new Split Payment feature in Facebook Messenger. 9to5Mac reports that this new bill splitting feature is still in beta and will be exclusive to US users at first. The rollout will begin early next week. As mentioned, it will help users share the cost of bills, expenses, and payments. This feature is especially useful for those who share an apartment and need to split the monthly rent and other expenses with their mates. It could also come handy at a group dinner with many people.
With Split Payments, users can add the number of people the expense needs to be divided with and, by default, the amount entered will be divided in equal parts. A user can also modify each person’s contribution including their own. To use Split Payments, click the Get Started button in a group chat or the Payments Hub in Messenger. Users can modify the contribution in the Split Payments option and send a notification to all the users who need to make payments. After entering a personalised message and confirming your Facebook Pay details, the request will be sent and viewable in the group chat thread.
Once someone has made the payment, you can mark their transaction as ‘completed’. The Split Payment feature will automatically take into account your share as well and calculate the amount owed accordingly.
Tasneem Akolawala is a Senior Reporter for Gadgets 360. Her reporting expertise encompasses smartphones, wearables, apps, social media, and the overall tech industry. She reports out of Mumbai, and also writes about the ups and downs in the Indian telecom sector. Tasneem can be reached on Twitter at @MuteRiot, and leads, tips, and releases can be sent to email@example.com.