Facebook Stock Will Weather The Storm

Facebook is in a hell of a lot of trouble. As scandals involving Russian accounts, fake news, and "profit by any means necessary" continue to hit headlines, some analysts are beginning to think that Facebook’s stock will eventually take a major tumble.

Meanwhile, other major companies, like Equifax are facing backlash for similar issues. It’s true that Facebook’s stock may take a hit, but in the long-term, it’s probably still a safe bet. Here’s why:

1. Facebook’s stock recently surged after its earnings report.

Despite all the vitriol and controversy surrounding the company, Facebook is still posting strong earnings. In fact, it’s posting stronger earnings than it had in recent months.

It’s understandable that the stock’s price has increased by over $20 since Facebook made its quarterly earnings announcement around the end of April. ($159.69 on April 25th to $182.68 on May 21st, to be exact.)

2. The platform’s audience is massive and most don’t want to give it up.

Here’s the sad, sad truth. Even though Facebook has been shown to have been profiting from Russian interference in the 2016 election, people don’t care enough to quit it. They just love the platform too much to give it up.

Social media is addictive. Facebook’s founder Mark Zuckerberg knows this. Most people who use Facebook won’t quit, simply because it’s become a major form of communication.
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Facebook is not the product; its users are the product. Unfortunately, there’s no sign that users are going to quit en masse. They will continue to be subject to the data mining operations of Facebook as long as they still can post updates and join group chats.

People want access to others, and that means their product will remain in demand—and in supply, thanks to its addictive traits.

3. Even the analytics show that Facebook’s not about to dip.

Seeking Alpha recently had a blogger point out that Facebook is far from being bloated. In fact, it might actually be grossly undervalued.

Facebook’s most recent reported revenue growth is 50 percent and continues to climb. Estimated value is based on revenue, and along with trading prices, and it’s likely to jump as soon as the market rallies once more.

4. Finally, there’s something to be said about Cambridge Analytica and Facebook’s similar clients.

Realistically, Facebook has evolved into more than a marketplace or a social platform. The fact that political groups are now paying the company to market to voters says that this is a platform that has MAJOR clients—clients that aren’t just clothing brands or car dealerships.
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Cambridge Analytica might be the most well-known, but it will not be the only one that will pay any price to change public opinion. Thinking about what that means for Facebook, it’s clear that the company will remain a good investment for the forseeable future.


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