Facebook Inc - Ordinary Shares - Class A

NASDAQ:FB   3:59:59 PM EDT
315.84
+10.58 (+3.47%)
4:10:46 PM EDT: $315.86 +0.02 (+0.01%)
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Mind Bending: Why Facebook is Worth More than Wal-Mart



##Symbol## WMT

The price paid in the stock market for growth is at extraordinary levels, as is the price paid for missing growth projections (see Twitter's collapse on earnings). Perhaps there is no better way to see this phenomenon than a direct comparison of Facebook to Walmart. While I authored a full article on Facebook (Why Facebook May Change the World and Double Its Stock Price) and you can get a full fundamental and technical read on Walmart (Walmart Trade Card), nothing is better than a few images.

Today Facebook has broken an all-time high and pushed its market cap to $244 billion. WMT sits at $233 billion (and Home Depot, the largest D-I-Y retailer is worth $146 billion). Here's the difference in the two with respect to annual revenue and annual net income (earnings) in one chart.


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Wal-Mart shows earnings in the last year of over $16B. Facebook shows earnings of $2.8 billion.
Wal-Mart shows revenue of $486 billion. Facebook shows revenue of $14 billion.

In one last image we can examine these two companies side-by-side across nine critical measures.



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If we tackle this row by row, we are left with an inarguable knowledge of the price of growth. Let's start with the first row.

Row 1: The first two images re-emphasize that FB revenue and net income are immeasurable to WMT. Period. The last image shows us the FB drives $1.34 million in revenue per employee while WMt drives $221,000.

Row 2: FB gross margin % and net income margin % (earnings margin) are HUGE compared to WMT. By huge I mean, FB keeps $0.21 out of every dollar in revenue as profit. WMT keeps $0.03 out of every dollar in revenue as profit.

Row 3: Finally, we can see that this is all about one word; GROWTH. Revenue for WMT grew at 1.7% year-over-year, while FB realized over 51% growth. With earnings it's about the same with a 1.7% growth for WMT and 46% growth for FB. Finally, what this all comes down to is this final sentence:

Every dollar of revenue is worth $17 in market cap to Facebook and just $0.51 to Wal-Mart.

That's your story. That's your reality. That's your conclusion.

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