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Peppermint Innovation Ltd (ASX: PIL) shares are bouncing around today after the company provided an update regarding the launch of a new insurance offering.

In early trade, the Peppermint share price surged by around 13% to 2.6 cents only to then retreat. At the time of writing, Peppermint shares are trading at 2.3 cents, flat for the day so far, amidst a wider market selloff. 

Let’s take a look at what the mobile banking app developer announced.

Peppermint offers new micro-insurance product

The Peppermint share price has been up and down today after the technology company announced it has entered into an agreement with Cebuana Lhuillier Insurance Solutions (Cebuana) in the Phillippines. Peppermint is now offering Filipino consumers access to life and accident insurance products.

Under the agreement, Cebuana will provide the insurance products and services to Peppermint. Peppermint will provide marketing and sales services as well as collect premiums and be responsible for compliance.

Using Peppermint’s bizmoto app technology, customers will have access to three different micro-insurance products to purchase on a monthly or annual basis.

Every policy covers emergency services associated with coronavirus.

CEO comments

Peppermint managing director and CEO Chris Kain said: 

Offering accessible and affordable insurance products is an extremely important part of Peppermint’s overall vision to deliver financial inclusion and social good to the Filipino people…

The aim of bizmoProtect is to deliver affordable and accessible accident and life insurance to Filipino people via our established bizmoto agent network using our new and improved bizmoto mobile App…

bizmoProtect represents the first product to be launched within our targeted financial services business sector and means that our bizmoto ecosystem is now live across all of the four key targeted business sectors of mobile payments, e-commerce, delivery and logistics and financial services.

Peppermint will receive a 5% or 10% service fee for all premiums collected and a 60% share of product mark up.

Peppermint share price snapshot

Peppermint Innovation services the Philippines market and is focused on the commercialisation and further development of its mobile banking, delivery and logistics, e-commerce and finance technologies.

The Peppermint share price has fallen by more than 20% over the past month. This comes following an explosion in the price of Peppermint shares in late January when the company resumed trading on the ASX after an extended halt.

Based on the current share price, Peppermint has a market capitalisation of around $37.4 million and there are presently 1.4 billion shares outstanding.

More reading

• Up 230%! What’s going on with the Peppermint Innovation (ASX:PIL) share price?

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It’s a good day to own shares in ASX energy companies today. The Woodside Petroleum Limited (ASX: WPL), Santos Ltd (ASX: STO), Oil Search Ltd (ASX: OSH), and Origin Energy Ltd (ASX: ORG) share prices are all rising today. The companies’ share price lift coming despite today’s 1.08% fall in the S&P/ASX 200 Index.

 The exception is Ampol Ltd (ASX: ALD), which has dropped 0.54% and is currently trading at $23.75.

At the time of writing, Woodside share price is up 2.07% to $25.20, Santos shares are selling 3.98% higher to be at $7.71, Oil Search lifted 3.33% to sit at $4.35, Origin shares are 1.14% higher, trading at $4.42.

Let’s take a closer look at why all these share prices are through the roof.

What’s lifting the ASX energy shares today?

 As reported in the Australian Financial Review (AFR), crude oil prices are surging after OPEC+ members announced they would continue production cuts into April.

OPEC+ comprises the 13 OPEC nations (such as Saudi Arabia, the United Arab Emirates, and Nigeria) along with 10 additional countries (like Russia and Mexico). The group acts (and the OECD defines it as) as an anti-competitive cartel. Members coordinate with each other to cut the supply of oil and thus boost its price on the market.

In the AFR report, OPEC justifies the cut by claiming that “demand recovery from the coronavirus pandemic was still fragile…” The inter-government organisation is withholding approximately 7 million barrels per day (bpd) from the market. This is down from the record 9.7 million bpd withheld last year.

There is also speculation Saudi Arabia may cut an additional 1 million bpd of production. The move could bring the total cut to 8 million bpd.

The website Trading Economics has the current price of crude oil at USD 64.06. That’s a 4.37% rise from last week.

In April last year, for the first time ever, crude oil was selling at an astonishing minus USD 40.32.

Despite increasing climate change awareness, oil is still the most consumed energy product globally.

Share price snapshots

Despite today’s gains, all the companies listed here, with the exception of Santos, are at a lower share price than this time last year. In fact, Santos’ current share price is a 52-week high.

One year ago, Woodside’s share price was $27.31, Santos was $6.88, Oil Search was $5.10, Origin Energy was $7.00, and Ampol was at $32.80.

The market capitalisation of the respective companies is $24.3 billion, $16.1 billion, $9 billion, $7.8 billion, and $5.7 billion.

More reading

• 5 things to watch on the ASX 200 on Friday
• What’s up with the oil price right now?
• 5 things to watch on the ASX 200 on Thursday
• Exploring the golden window of opportunity for ASX ESG investors
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Crown Resorts Ltd (ASX: CWN) share price is under a cloud as Western Australia launches a Royal Commission.

The Crown share price fell 1% to $9.86 during lunch time trade. This happened as the S&P/ASX 200 Index (Index:^AXJO) shed a similar amount.

What’s interesting is that Crown’s share price is holding up better than its rival, the Star Entertainment Group Ltd (ASX: SGR) share price. The Star Entertainment share price lost 1.1% to $3.63 at the time of writing.

Double trouble for Crown share price

The WA government appointed two retired judges and an auditor-general to look at whether Crown should lose its casino license in the state, reported the Australian Financial Review.

This means management will have to face two Royal Commissions as Victoria announced its own last month.

However unlike Melbourne, WA’s Royal Commission will also look at the state’s Gaming and Wagering Commission. The state’s watchdog has been accused of being too close to Crown.

Similar allegations were levelled at the Victorian government, but Daniel Andrews is sweeping that under the carpet.

Royal Commission upgrade

WA initially wanted to hold an inquiry, but Racing and Gaming Minister, Paul Papalia, said the government decided to upgrade the inquiry to a full royal commission to provide extra legal protection to witnesses.

This is the first Royal Commission held by the McGowan government, which is facing a state election next week.

The Royal Commission will cost WA taxpayers around $5 million and will be led by Neville Owen. His fellow commissioners are former Supreme Court judge Lindy Jenkins and former West Australian auditor general Colin Murphy, reported the AFR.

Taking the crown for money laundering

At least Crown has a lot of practice with Royal Commissions. It was put through the wringer by New South Wales, which found that Crown enabled and facilitated money laundering for around five years.

Crown used two bank accounts for its illegal operations at its casinos in Perth and Melbourne. Hundreds of millions of dollars were believed to have passed through the two accounts each year.

The damning findings prompted WA to ban Crown from organising gambling junkets in the state while its inquiry is running.

Foolish takeaway

The new legal challenge in WA isn’t unexpected and could explain the Crown share price reaction.

Investors may also believe that even if Crown is found guilty (which is a likely outcome, in my view), that it will still be able to retain its licenses as long as more heads roll and major shareholder, James Packer, sells off his stake in the company.

More reading

• Tilt Renewables (ASX:TLT) share price falls despite wind farm news
• 5 things to watch on the ASX 200 on Friday
• This investment is one of Warren Buffett’s favourite share ideas
• Thursday’s top performing ASX 200 shares at the end of the session
• ASX 200 sinks, Xero reveals acquisition, ARB driven higher

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia has recommended Crown Resorts Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Before the world had heard of the so-called Reddit army and WallStreetBets.

Before most any of us had a clue what GameStop Corp (NYSE: GME) did, let alone that the GameStop share price would be claiming global financial headlines for weeks running.

Before all of that, there was Robinhood.

That’s the United States-based, commission-free investing app that soared in popularity during the long months of the pandemic lockdown. Millions of retail investors signed onto the service. Many invested in shares solely because they were moving higher.

Chasing the momentum higher, some day traders certainly made money. But many others will have lost money, buying into the big, new story too late, when share prices were due for a major retrace.

Two investment legends give Robinhood style day trading the thumbs down

Charlie Munger, Warren Buffett’s long time business partner, cautioned investors about the nature of day trading. He compared it to gambling, specifically to punting on racehorses.

That critique was not well received. Robinhood itself tweeted, “To suggest that new investors have a ‘mindset of racetrack bettors’ is disappointing and elitist.”

But Munger isn’t the only investment guru concerned with the risks of short-term profit chasing. Richard Bernstein, founder of investment management firm Richard Bernstein Advisors, stepped into the debate himself.

As Bloomberg reports:

Munger’s comments “were derided as those made by an old guy who does not understand today’s more modern markets,” Bernstein wrote, but stock market history backs up Munger’s point about a short-term focus being harmful to one’s wealth, particularly when chasing popular momentum stocks.

Day trading or coin flipping?

Bernstein backed up his warning with a chart showing that the probability of losing money on the S&P 500 Index (SP: .INX) – using rolling price returns from January 1930 to January 2021 – increases markedly the less time an investor holds onto their shares.

For those buying and selling in one day, there’s a 46% chance of losing money. That drops down to 31% at 12 months and 10% for long-term investors holding on for 10 years.

Bernstein said:

The probability of success when day trading is only slightly better than when flipping a coin. There has historically been about a 54/46 chance of making money when holding stocks for a day versus 50/50 from coin flipping.

More reading

• Is Reddit’s GameStop (NYSE:GME) crowd targeting Asian shares?
• Why GameStop (NYSE:GME) stock soared another 18% today
• Robinhood fires back at Berkshire Hathaway’s Charlie Munger over criticism
• Is the Reddit army planning another GameStop (NYSE:GME) short squeeze?
• Here’s why GameStop stock just exploded higher

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Weebit Nano Ltd (ASX: WBT) share price is sinking in early-afternoon trade despite the company announcing two new filed patents.

At the time of writing, the memory technology company’s shares are down 5.83% to $1.94.

Let’s take a quick look at the company’s update today and why the Weebit share price is falling.

Why is the Weebit share price falling?

The Weebit share price may be losing ground today despite its positive announcement as investors sell off their positions due to renewed pandemic fears. A potential fourth wave of COVID-19 and a new strain variant could hit the United States, which has sent worldwide markets lower.

Overnight, the Dow Jones ended its session 1.1% lower to 30,924 points. The S&P 500 and Nasdaq index dropped 1.34% and 1.73%, respectively.

So, what did Weebit announce?

In this morning’s release, Weebit advised that it has filed two new patents based on some programming improvements made to its ReRAM technology. The submission aims to protect the intellectual property of the company’s silicon oxide ReRAM memory.

The first patent refers to chip circuitries that operate together to improve access time and power. This is linked with programming the memory module while increasing bit performance.

The second patent explains changes within its chip circuity that allows the memory access speed of the ReRAM to double. Weebit noted this was beyond what current non-volatile memories exist today.

A quick take on Weebit Nano

Weebit Nano develops next-generation computer memory technology. The company addresses the growing need for data storage and embedded non-volatile memory (NVM) technology with its new, resistive random-access-memory (ReRAM) technology.

According to the company, “Weebit Nano’s technology enables a quantum leap, allowing semiconductor memory elements to be significantly cheaper, faster, more reliable and more energy-efficient than the existing Flash technology”.

CEO commentary

Weebit Nano CEO Coby Hanoch hailed the company’s progress, saying:

We are proud to continue leading the innovation trend in the ReRAM ecosystem. As we make progress towards taping out our first ReRAM memory module, planned for the middle of this year, we are further enhancing our intellectual property with unique design-related patents.

These patents are game changers for some applications, supporting Weebit’s focused efforts towards achieving a first commercial agreement.

Despite today’s fall, the Weebit Nano share price is trading close to 450% higher in the past 12-month period.

More reading

• The Weebit Nano (ASX:WBT) share price dips on widening losses
• ASX cheats offered immunity… with one catch
• ASX exec sentenced to jail for WhatsApp market manipulation

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Countries are holding on tight to their locally produced COVID-19 vaccines. As reported by ABC News, Italy and the European Union pulled the handbrake on the 250,000 AstraZeneca Plc (LSE: AZN) doses bound for Aussie shores. Australian politicians have stated that this is not an issue for our COVID-19 vaccine rollout.

As countries globally rush to get their hands on an approved vaccine, tensions have developed. Considering it is a potential ticket to returned economic growth, some are prioritising their own jurisdictions first and foremost.

Not an issue for our vaccine rollout

Australian Health Minister Greg Hunt remarked that this decision by the EU would not impact Australia’s COVID vaccine rollout:

This is one shipment from one country. This shipment was not factored into our distribution plan for the coming weeks. Domestic production starts with 1 million per week of deliveries from late March and is on track.

NSW Premier Gladys Berejiklian commented on the news this morning, emphasising the critical nature of local production:

I think what it demonstrates is the importance of us having a local supply. In the future, there will be supply issues. You need lots of jabs to be vaccinated properly, and therefore it’s really important for us to be able to have our local supply.

The local supply these ministers refer to is coming from Australian-based CSL Ltd (ASX: CSL). Despite the emphasised importance of its operations this morning, the CSL share price is trending 2.6% lower. The biotech giant has now fallen for four consecutive sessions, erasing 8% in 4 days.

Domestic production of the AstraZeneca vaccine by CSL was expected to begin in early March. The company’s production is anticipated to yield around 1 million doses per week by the end of March.

Ironic timing as first AstraZeneca vaccine administered

The EU’s decision to block the 250,000 vaccines comes at an ironic time, as the first AstraZeneca dose was administered in Australia today.

An estimated 40 frontline staff at the Murray Bridge Hospital in South Australia will have received the vaccine by the end of the day.

The first AstraZeneca jab has been administered in Australia! This is Dr Caroline Phegan she’s one of the frontline workers at the Murray Bridge Hospital to receive the vaccine. @abcadelaide @BreakfastNews pic.twitter.com/AlvMmFTDbc

— Sarah Mullins (née Hancock) (@sarahmullins) March 4, 2021

https://platform.twitter.com/widgets.js

Premier Berejiklian also mentioned that she believed media coverage should pivot to reporting on the number of vaccines administered rather than the number of new cases.

Furthermore, with the COVID vaccine rollout underway, the premier urged for the reopening of borders. Otherwise, she said, Australia could be left in the dust economically.

More reading

• Thursday’s top performing ASX 200 shares at the end of the session
• CSL (ASX:CSL) share price is now down 12% in 2 weeks
• Why are these ASX 200 healthcare shares sinking today?
• 2 fantastic blue chip ASX 200 shares to buy
• 5 things to watch on the ASX 200 on Thursday

Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Immutep Ltd (ASX: IMM) share price is down 1.59% at the time of writing trading at 31 cents a share. This follows this morning’s announcement that Immutep is expanding Part B of its cancer treatment clinical trial.

Let’s break down what that means and why it could be moving the Immutep share price today.

More patients recruited for expanded trial

Based in Australia, Immutep develops novel immunotherapy treatments for cancer and autoimmune disease.

In today’s release, the biotechnology company advised that it had recruited 13 more patients with second-line non-small cell lung cancer (NSCLC) for Stage 1 of the now expanded Part B of its TACTI-002 Phase II trial.

The trial extension follows the recommendation of the data monitoring committee following a preliminary safety and efficacy review. TACTI-002 stands for Two ACTive Immunotherapies. 

Immutep is conducting the trial by treating cancer patients with a combination of its eftilagimod alpha product (efti) and Keytruda®, produced by US pharmaceutical company Merck & Co., Inc (NYSE: MRK).

Efti is in clinical development to treat cancer. Immutep has three additional treatments for cancer and autoimmune disease that also are in clinical development.

Immutep’s half-year update

Discussing the company’s leading efti product in its latest half-year FY21 results, Immutep advised:

Following the encouraging clinical results announced for efti last year, Immutep is in a very robust financial and operational position.

The company has increasing confidence in efti and accordingly, three new efti trials or trial extensions with up to 386 patients in different cancer indications were announced or started during the half year, in addition to its ongoing clinical trials of the product candidate.

Immutep is also working on scaling up efti manufacturing in preparation for potential commercial manufacturing and additional registration trials in multiple indications.

Immutep share price snapshot

Despite positive progress on its clinical trials, the Immutep share price has taken a 20.3% dive over the past month. Year-to-date, it’s fallen 24.1%.

The company presently has a market capitalisation of 217.3 million and there are 648.7 million shares outstanding.

More reading

• Tilt Renewables (ASX:TLT) share price falls despite wind farm news
• ASX lithium shares to get price shock as commodities supercycle charges up
• 2 reasons Facebook stock is a buy
• Australia’s share market is the world’s best since 1900
• Neometals (ASX:NMT) share price unfazed by battery recycling agreement

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Tilt Renewables Ltd (ASX: TLT) share price is getting hammered today despite the company providing a positive update to the market this morning. The Tilt share price started the day well, opening 2.4% higher at $6.01.

However, at the time of writing, Tilt shares have retreated back to $5.70, down 2.9% for the day so far. The S&P/ASX 200 Index (ASX: XJO) is also having a pretty lousy day, currently down 1.25%.

Tilt Renewables is a company that operates a portfolio of renewable energy assets across Australia and New Zealand, mostly solar and wind farms.

So what did Tilt report today?

Why did the Tilt share price open higher?

The Tilt share price enjoyed a temporary boost on open as a result of an announcement the company made to the ASX this morning. In the announcement, Tilt reported that its Waipipi Wind Farm, located in South Taranaki, New Zealand, has now been completed. The 133-megawatt farm has 31 completed wind turbines. All 31 turbines are now in a position to export power to the grid.

The Waipipi Wind Farm is the company’s largest asset in New Zealand. It will produce an estimated 455 gigawatt-hours of electricity on average per annum. That’s enough to reportedly power 65,000 homes.

It was only back on 12 February that Tilt told the markets that the last two turbines were close to being commissioned for grid exploration, with “construction winding down”.

Here’s what Tilt CEO Deion Campbell had to say on that announcement:

To safely complete construction of 31 of the largest wind turbines ever installed in New Zealand very close to the original schedule is a  superb result, one not common to many large infrastructure projects and a credit to all involved in the planning and execution of the project. This is despite the site being shut down for 5 weeks due to New Zealand’s COVID‐19 pandemic response.

Last month, we reported on how Tilt might be acquired by its major shareholder Infratil Ltd (ASX: IFT). That provided a major boost to the Tilt share price at the time. It seems investors have been reluctant to build on that price momentum after today’s announcement.

Tilt shares are now up a healthy 54% since 4 December last year, and up by around 10% since 20 January. On the current Tilt share price, the company has a market capitalisation of around $2.21 billion.

More reading

• 5 things to watch on the ASX 200 on Friday
• This investment is one of Warren Buffett’s favourite share ideas
• Thursday’s top performing ASX 200 shares at the end of the session
• ASX 200 sinks, Xero reveals acquisition, ARB driven higher
• ANZ (ASX:ANZ) share price outperforms on broker “buy” upgrade

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The market may be under appreciating the upside potential for ASX lithium shares. Is UBS estimating that battery supply will need to expand by more than 20 times in the next few years.

ASX lithium miners have been performing strongly as it is. But UBS’ bullish view that is underpinned by its belief that electric vehicles (EVs) are switching to the fast lane could give the sector an extra boost.

ASX lithium shares benefit from EV adoption upgrade

The analysts at UBS took a detailed look at Volkswagen’s first affordable EV offering, the VW ID.3, which should arrive in Australian next year.

“We are more confident than ever in a steep EV penetration curve: 20% market share by 2025, 50% by 2030 (prev. 40%), with a chance of 100% by 2040 (prev. 80%),” said UBS.

“To reach 20% and 50% EV penetration in 2025 and 2030 respectively, we forecast battery cell supply needs to increase c22x to 4.5TWh (up 70% from our previous forecast) over the next decade.

“We also believe the average battery size per vehicle will now be 94kW-hr by 2030, up from our prior estimate of 73kW-hr.”

ASX miners rock to lithium supply shock

The broker’s growing confidence in the penetration rate is bolstered by the view that the cost of EVs will be on par with conventional ones by 2025.

“We don’t think that the raw material supply-side is ready for the wave of demand that is coming should our EV outlook hold,” concluded UBS.

While lithium, the key ingredient in batteries, isn’t a rare commodity, miners aren’t investing enough currently to meet future demand.

Why lithium may be heading higher over the next decade

If you added up all known projects up to 2030, regardless of their feasibility in this environment, UBS said the increase in lithium supply is only enough to satisfy a 22% EV penetration rate.

What this means is that lithium prices are likely to rise over the coming years. Higher prices are needed to incentivise miners to invest in exploration and mine and plant expansions.

Price upgrades support these ASX mining shares

“Accordingly, we have lifted our lithium price forecasts by >10% over the next five years while also upgrading our long term prices by 4-17%,” explained UBS.

“[We] and now forecast US$11,000/t for lithium carbonate (prev. US$10,500/t) and US$700/t for spodumene (prev. US$600/t).”

The upgraded lithium price outlook is good news for ASX lithium shares. These include the Syrah Resources Ltd (ASX: SYR) share price, Galaxy Resources Limited (ASX: GXY) share price and Orocobre Limited (ASX: ORE) share price.

UBS is urging investors to buy all three ASX shares. It also rates the IGO Ltd (ASX: IGO) share price as a “buy” as nickel is another ingredient needed to produce batteries.

More reading

• The Vulcan Energy (ASX:VUL) share price has fallen 17% in 2 weeks
• Leading brokers name 3 ASX shares to sell today
• Orocobre (ASX:ORE) share price dives despite a recovery in lithium markets
• Why the Galaxy Resources (ASX:GXY) share price is tumbling lower today
• Leading brokers name 3 ASX shares to sell today

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Between the four major U.S. social media stocks — Facebook (NASDAQ: FB), Twitter (NYSE: TWTR), Pinterest (NYSE: PINS), and Snapchat (NYSE: SNAP) — which was the worst performer of 2020? 

If you guessed Facebook, you’re right. Pinterest’s 250% price rally in 2020 far outpaced Facebook’s 31% gain. Facebook’s returns also lagged the Global X Social Media Index ETF (NASDAQ: SOCL), which tracks over 30 companies involved in social media. In 2020, the ETF posted an annualized return of 78.4%. 

That said, it’s too early to call Facebook an underperformer. This, after all, is a company that’s consistently delivered double-digit percentage growth year after year. The big question is: Can this FANG stock get its bite back? I think so, and here are two reasons why.

1. Facebook executed incredibly well despite COVID-19

Ask corporate America what they thought about 2020 — and many will tell you it was the worst year of the decade. The coronavirus devastated many companies in industries ranging from retail and energy to tourism.

Facebook had a pretty good year, though.

In 2020, Facebook’s revenue rose 22% to $86 billion, driving a 58% surge in net profit to $29 billion. Monthly active users (MAU) also grew 12% year over year, to 2.8 billion.

Initially, there was concern that advertisers would cut back on spending, hurting Facebook’s revenue. But those fears turned out to be unfounded. Forced to stay at home due to COVID-19, people spent more time on social media. To reach these users, businesses had little choice but to keep advertising on Facebook — by far the largest social media network. In 2020, nearly a third of every digital advertising dollar went to Facebook, according to a report by the World Advertising Research Center (WARC).

These numbers validate the strength of Facebook’s business model, which is anchored to the value it provides users. For one, the Facebook family of services — including Facebook, Messenger, Instagram, and WhatsApp — keeps people connected. But Facebook provides much more than “just” communication tools. Its apps are also an avenue for news, entertainment, and business. All these features have made Facebook simply indispensable — and more so amid the pandemic.

Facebook made a few smart moves in 2020. One of them was a renewed push into e-commerce, in partnership with Shopify (NYSE: SHOP). With the launch of Facebook Shops and other e-commerce tools, both companies will make it easier for Facebook’s users to grow their online businesses. 

This gives users yet another reason to spend time on Facebook. And if successful, Facebook’s e-commerce initiatives could improve its user monetization.

2. Investors aren’t very excited about Facebook

As the pandemic ravaged global economies, many small businesses were forced to shut down. Millions of Main Street Americans have lost their jobs.

Still, Wall Street had one of its best years ever. The Nasdaq Composite (NASDAQINDEX: ^IXIC) rose 44% in 2020 — its best performance in 11 years, according to MarketWatch.

Shares of Shopify and MercadoLibre almost tripled in 2020 as they rode on the tailwinds caused by the pandemic. But Facebook — which benefited from the pandemic and delivered solid revenue and profit growth — rose a relatively measly 31%. 

I think investors haven’t neglected Facebook’s strong execution in 2020. Instead, they’ve been rattled by repeated calls to break up Facebook, as well as its very public clash with Apple. That has taken some glitter off Facebook, resulting in it trading at a valuation of less than nine times 2020 revenue.

While that appears reasonable, consider the astronomical valuations enjoyed by trendier tech companies like Snowflake (NYSE: SNOW). Snowflake trades at a whopping 277 times 2020 sales.

Why Facebook is a buy now

Facebook shines when it comes to consistency and growth. Between 2016 and 2020, revenue rose at an impressive compound annual growth rate of 33%. 

In coming years, Facebook will likely keep growing at double-digit rates as it unlocks the value of Instagram and WhatsApp. Facebook could also deliver upside surprises with newer ventures, including the Oculus virtual reality platform and payment services.

In the near term, there’s a risk of a pullback — given Facebook shares have almost doubled from their March 2020 lows. But that shouldn’t deter investors with a five-year time horizon. Facebook is here to stay, and it will only get bigger in years to come.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Lawrence Nga has no position in any of the stocks mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Facebook, MercadoLibre, and Twitter. The Motley Fool Australia has recommended Apple and Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 reasons Facebook stock is a buy appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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