GOOG vs. FB Stock: Tech Titan Showdown

by Robert Martin | June 13, 2014 9:45 am

Google (GOOG[1]) continued its shopping spree this week, dropping a half-billion for micro-satellite startup Skybox Imaging. As you might guess from the word “Imaging” in the company’s name, Skybox satellites collect daily photos and videos of earth — a capability that is said to be the main driver of the acquisition.

But looking a bit further down the line for GOOG, there is still potential that these satellites could serve a greater purpose: They could help provide Internet to remote parts of the world. As The Wall Street Journal [2]summed it up for any interested Google stock fans:

“Google also is trying to cover the globe with fast Internet access from the sky, using balloons, drones and satellites. The goal is to get everyone in the world online, which would likely increase the number of Google searches and boost the company’s advertising revenue, as well as usage of services such as Gmail and Maps.”

Does that lofty goal of Internet for all sound familiar? It should. That’s because everyone’s favorite social network Facebook (FB[3]) has a similar master plan, which Cade Metz at Wired[4] summed up similarly:

“Mark Zuckerberg is putting together a lab where a team of Facebook engineers will build flying drones, satellites, and infrared lasers capable of beaming internet connections to people down here on earth …

All this may seem like a stretch for a social networking company. But it’s a necessary part of Zuckerberg’s efforts to bring the net to the vast parts of the world that still don’t have it — an effort known as Internet.org that makes an awful lot of sense for a company whose continued expansion depends on the continued expansion of the net.”

But whether you’re a fan of Facebook stock or Google stock, such initiatives should elicit the same reaction: They sound great … but also like long shots. So hopefully, you’re not piling into shares of FB or GOOG on the hopes that balloons will float Internet to all corners of the world, and thus float the stock price higher, as well.

That doesn’t necessarily mean you shouldn’t consider snagging a few shares of Facebook or Google, of course. You just shouldn’t do so based on drones and balloons.

With that in mind, let’s take a look at a few down-to-earth metrics that may actually help you decide whether to take a ride with FB stock or GOOG stock:

• Year-to-date return: So far in 2014, Facebook stock is simply running away with things on a pure performance scale. Since Jan. 1, shares of FB stock have soared 18% — dramatically better than Google stock. Shares of GOOG are in the red at the moment, with a loss of 2% year-to-date.
• Price-to-earnings ratio: Of course, that doesn’t mean Facebook stock is necessarily a better buy after such a run — right? Well, according to Google Finance, Facebook stock currently sports a P/E of 80, while Google stock currently sports a P/E of 30. Then again, a sky-high P/E ratio is hardly new for FB — and hasn’t stopped it from climbing higher in the past.
• Acquisition spree: Unlike tech rival Apple (AAPL[5]), FB and GOOG are both trigger-happy when it comes to snatching up smaller companies. Over the last two years, Facebook has made 23 acquisitions. But over the same time period, Google has made over 40 acquisitions … and that’s not a new trend for Google. In the past decade, the search giant has gobbled up around 250 companies.
• Most recent earnings results: In April, Google stock suffered as the company posted an earnings miss on the top line and bottom line, despite 19% sales growth. For Facebook, one the other hand, things have been far smoother. In the same month, Facebook announced an earnings beat and wowed investors with its mobile growth.

The bottom line: Facebook stock has the momentum. However, Google stock’s weakness is but a blip on its impressive track record — and could thus be a buying opportunity more than anything else. But the bottom line is that both tech giants have a lot more to offer than big dreams about the future of Internet access.

As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2014/06/goog-fb-stock/

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