 Good day, fellow investors. After months of anticipation, Facebook finally did it. They launched their cryptocurrency called Libra, an administrative subsidiary where they will make their money called Calibra. The coin will go live only in 2020, but as investors in stocks, as stocks always anticipate what will happen, we have to look ahead and try to anticipate what will be the effect on Facebook, which is a covered stock on this channel publicly. I am also long a few shares of Facebook, so I want to see whether this impacts my investment thesis for Facebook, how it impacts and what might happen. So let's start. So in ancient Rome, the Libra was a unit of weight and Facebook is adding the Libra to the cryptocurrency, let's say craze and the blockchain technology. The difference between Facebook and all the other coins and everything is Facebook's scale, power, software, engineering, engineers that can develop it, grow it, and then they have a great user base of already 2.4 billion people, and they also partnered with huge names, which make this, let's say, the most powerful coin that has been launched up to date. If we just look at the partners in the coin project, we have Mastercard, PayPal, Stripe, Visa, Booking, Lyft, Uber, Vodafone, and many other investors in the coin that will give its power, but that will give the value to the coin by investing capital into it. The Libra story is very simple, they want to create something that allows for easier transactions, faster transactions to cater to the non-banked that are billions in the world. So to make what Facebook is in the messaging world, connecting people to make it also in the financial world, connecting people in the financial world through easier transactions. Of course, there is a profit side to it when people start trading, buying things on Facebook, through clicking on a Facebook ad, I don't know, on booking, you're paying with Libra or paying directly, Facebook will get the cut on that, and therefore Facebook might increase their revenues in the future. Barclays estimated that Facebook's cryptocurrency revenue could be already at 19 billion in 2021. That would be a huge bonus to Facebook as their profit margin might be 50%, so that's just 10 billion of added income. However, such projections are really futile. Libra will either succeed or fail, given the networking effect, the scale, it either goes big or it fails, and that's what Facebook also knows. If it succeeds, and let's say that in 10 years, the transactions with Libra amount to, I don't know, 500 billion and Facebook's profit on that is 50 billion on a 40% margin, it means that Facebook's net profit from this project in 10 years could be 20 billion dollars. Given the growth, given the scale, given the idea, given the technology, let's attach a price earnings ratio of 20 on those 20 billion dollars, and you have a market capitalization of 400 billion. Add that onto the current market capitalization, and just this project might add 75% of Facebook's value over the next 10 years. If it succeeds, if it doesn't succeed, it's just another one of the things Facebook is testing, and you never know which one of those will explode, scale, go into the network effect, and become a huge profit contribution for Facebook. If we just think of Instagram seven years ago, they paid just one billion for it, and now it is the growth engine of the company, with huge promises from Instagram shopping, huge revenue growth from the ads, from stories, from everything, and we will still see how will Facebook monetize that in the future. So you always think of Facebook like a company with a lot of blocks. If the blocks fail, it isn't such a big cost for Facebook. One billion is not a cost, but if one succeeds, scales, network effect, then it's a huge, huge gain. We will see whether Libra will become a success or not. It's too early to talk about the details, so it's really a waste of time. We will see, nobody knows, the technology is still in early development, like the early development of the internet, but there is potential. A good indication of what could Libra become is Alipay from Alibaba as mobile transactions in China more than doubled from 2017 to 2018 from one trillion Remymbi to two trillion Remymbi. As said, if this crypto thing works, the current market cap of Facebook is 537 billion, add 400 billion onto that from the crypto situation, and then you already have a 75% return just from this starting idea. So you're practically investing in a startup. Don't forget that Facebook grew its revenue 26% in the last quarter. The price earnings ratio is just 27.99 for such a growth company, which is already profitable, making money, having great returns on invested capital, and will be a good investment, cryptocurrency or no cryptocurrencies. Now, Libra is just starting. There will be issues, there will be regulatory issues. Every bank, national bank will dig into it. There will be Congress, Congress will look at it, the SEC will look at it. It will last long, but if a company can manage to pull this off, then it is Facebook because of the scale, the power, it's 2.5 billion people. Don't forget about that. However, what I want to discuss here is the difference between Libra and let's say Bitcoin. That was promised to take over the way we transact, but it didn't happen. The main difference is that Libra is a stable coin, which means that it's backed by real assets. In this case, it will probably be stable government bonds, if you can call them stable, government bonds, but it will give you the security that if you have 10 Libras now and you can buy, I don't know, 10 cups of coffee, tomorrow you will still be able to buy the same cups of coffee with the same Libras. That's the stable coin message, that's the stable coin entity, and it really allows for transactions. Bitcoin and all the other cryptocurrency were more about speculation, and the value, the first rule of monetary policies is to have stability in the currency, and if you don't have that stability, then that currency is not used in transactions, and then it's, after all, not a currency, but somewhere where people like to store value perhaps or not. Let's see what Facebook says about it. Many cryptocurrencies today have no underlying assets to back them. As a result, speculation and investment have been primary use cases, as with the potential for substantial appreciation, many people have acquired these coins, hoping to sell them at a higher price later. As beliefs over long-term value of these currencies and successes of their networks fluctuate, so have their prices, yielding at times massive swings in value. So this is not stability, you cannot use it for transactions, I wouldn't want to be paid in bitcoins, but perhaps at a future date, I will like to be paid in Libras, which will diversify my currency on a global basis. So as investors, this might be good, this might not be good, doesn't matter if it is good, it is a huge bonus. I don't think it is even priced into the stock price now, but might be a big component over the next 10 years, and that is the story, that is the investment thesis with Facebook. That's why I'm long Facebook. I like the 2.4 billion people, and I don't know what will Facebook build as an ecosystem around that, but I'm happy to hold it and wait for it. And I'm happy to see, to hold this at the 25p ratio with 20-40% earnings and revenue growth. That will come just from the ads, from monetizing what they already have, not even counting what they might have in the future, from VR, from AR and everything that Facebook might do in the future. The risk reward remains positive, that's the message, high upside potential from all the projects, from all that can happen. The risk downside is there, but limited because of the scale of the growth and the profitability that Facebook is showing with a high return on investment capital. That's it. Thank you for watching. Looking forward to your comments. Don't forget to tune in tomorrow, when we will discuss what's very important when it comes to economics, the stock market news, discussing budget deficits, inflation, the monetary policy, the Fed's decision to even lower rates in the future, the ECB saying how they will do whatever it takes, and how to invest then, how will that affect our investments over the next decades. Thank you and I'll see you in the next video.