Paul Meeks: Facebook is the new Coca-Cola

Published Thu, Aug 4 20164:53 PM EDT

Coincidentally, Facebook and Coca-Cola recently reported their quarterly earnings on the same day last week. The former's daily active users rose to 1.13 billion, which was up 17 percent from the prior year; and, critically, 91 percent of those folks were mobile users. Its monthly active users jumped 15 percent to 1.71 billion. Coke claims that it sells 1.9 billion servings (12 ounces per serving) of its sugar water worldwide each day. Yet, its unit case volume and concentrate sales continued to dwindle in the June quarter. The reason why I compare these seemingly unrelated behemoths is that I believe that Facebook ultimately will "touch" more people around the world than Coke did at its peak. If I'm right, the worth of the former's brand is still undervalued and perhaps significantly discounted. Other Street veterans may remember Coke's glory days when its brand reigned. The stock made investors like Warren Buffett a ton. I think that Facebook will get the same "cred" and durable stock outperformance According to BrandFinance's Global 500 2016, which ranks the world's most valuable brands, Facebook was No. 18, up from No. 32 last year. Coke was No. 17, down from No. 12 in 2015. This relative performance doesn't surprise me. What I do find intriguing, however, is how can 17 organizations, including Coke, be ahead of Facebook? Stay tuned. Facebook will take out Coke and other American yesteryear companies ahead of it like GE , McDonald's , Walmart , AT & T and Verizon . Tougher to beat will be the survey's top five including Apple (No. 1), Google , Samsung , Amazon.com and Microsoft , but even they don't have as many "touches" as Facebook. In addition to an intentional initial 50 percent position in Facebook, my "Platinum Portfolio" features Amazon and Google. It has been a very good few weeks for the portfolio's performance. What impressed me most about Facebook's Street-beating June quarter was not the various average user statistics, but the accelerated increase in average revenue per user (ARPU). Worldwide, the figure popped 38 percent year to year from $2.76 to $3.82. It's "worst" market, the catch-all rest of world, "only" climbed 26 percent. Although Facebook is beginning to experience operating leverage off fast sales growth, think about its margin improvement potential if international ARPU more quickly closes the gap with U.S. and Canada performance. Most of the Street analysts raised their Facebook price targets after its quarterly report. That was no surprise. That had been the pattern for every quarter for a year or two. The consensus "fair" value for the company's shares now is $153, which still is too low in my view. Disclosure: Paul Meeks owns FB personally. Paul Meeks is a technology investor and member of the "Squawk Box" Platinum Portfolio competition for CNBC Pro.

Mark Zuckerberg, Facebook CEO

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Coke claims that it sells 1.9 billion servings (12 ounces per serving) of its sugar water worldwide each day. Yet, its unit case volume and concentrate sales continued to dwindle in the June quarter.

The reason why I compare these seemingly unrelated behemoths is that I believe that Facebook ultimately will "touch" more people around the world than Coke did at its peak. If I'm right, the worth of the former's brand is still undervalued and perhaps significantly discounted.