Bill Miller on Facebook
Prior to sharing his views on market movement and potential market risks in an interview with CNBC, legendary billionaire investor Bill Miller shared his views on Facebook (FB). Whereas Miller is still optimistic on Facebook (FB), billionaire investor Jeffrey Gundlach is shorting Facebook, as he believes the company’s recent data breach issue has diminished its reputation among consumers and investors.
Facebook’s data breach issue
After news of data research company Cambridge Analytica acquiring the personal data of 50 million Facebook users without their consent, Facebook stock fell drastically, by 10.4%, in March.
In spite of this data scandal, Bill Miller believes the stock’s valuation is “too cheap.” On May 4, Facebook was trading at $176.61, and its trailing PE (price-to-earnings) ratio was 25.9x. Meanwhile, the broader-market S&P 500 (SPY) was trading at a trailing PE ratio of 21.2x.
However, in 1Q18, FB reported earnings per share of $1.69, beating analysts’ estimate of $1.35. The stock recovered strongly in April, by 7.6%, after its fall in March. The Technology Select Sector SPDR ETF (XLK), which tracks the performance of the technology sector, was flat. For more, read Jeffrey Gundlach at the 2018 Sohn Conference: Long Energy Stocks.