Continued from Part 3 -- As mentioned earlier, I highly admire Google's competitive advantages and companies with organic advantages are among my favorite investments. Facebook has become somewhat of a competitor in the advertisement space, but it simply isn't in Google's league on that front. Many people are exposed to Facebook ads, but vastly more will be exposed those stemming from their search efforts and everyday web browsing. Accordingly, most ad seekers will continue to prefer Google, or at least use it in conjunction with another advertising service, and the growth in its web-based services is continuing on an upward trajectory as demonstrated by its continued revenue expansion. Second, even if we do assume that Google's position in web-based advertising begins to slip such that EBITDA margin begins to decay at 50 basis points annually (unlikely), the stock represents just 10% downside from it current price. This type of continuous margin contraction tends to be fairly lethal when valuing most other companies or business segments given they can't manage the top-line growth. Even if Google's margins are walloped by a continuous 100 basis points per year every year starting with the FY2017 (extremely unlikely), the stock still represents just 25%-26% downside, which is very good all things considered. In terms of sensitivity analysis with respect to YOY revenue growth (with no margin contraction), 6% revenue growth would place the stock at just $600 per share; 14% would place it at $1,000 per share.(Image source: author) At 10% YOY revenue growth and an EBITDA margin decay of 80 basis points per year (i.e., 8% contraction by the FY2026), GOOG would be fairly valued at just below $600 per share. Twenty bps of margin expansion at 10% YOY sales growth during the projection period would place its fair value at just over $800.(Image source: author)