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Facebook Is Planning For The Future, And Will Reward Investors Long-Term

J Cooper profile picture
J Cooper


  • Facebook's recent actions have unsettled the stock at times.
  • But I see those actions as a long-term positive for the company that will strengthen its image and its future, even if short-term profits and usage decline.
  • I like Facebook and have a target price for it of ~ $204/share.

Despite Facebook's (FB) choppy recent performance, I like the company and the stock. Facebook has faced challenges recently, in the form of Russian election interference and the subsequent changes Facebook has made leading to a decline in U.S. and Canadian users.

Facebook is focused on the long term and is not just trying to maximize short-term profits or short-term usage. Hiring additional security to limit problems like Russian interference will cost money in the short-term but will increase the reputation and image of the Facebook platform in the long term. Similarly, Facebook's focus on having the Facebook feed positively impact its users' lives will lead to higher user satisfaction, and lower rates of people disconnecting their Facebook account. Both changes will promote the platform and the company long term.

Since my previous article on Facebook in October, Facebook's performance has been choppy. Some of this performance can be attributed to the underlying market - Facebook's slide during the first week of February was in line with the rest of the market, rather than based on Facebook-specific events. But Facebook has also fallen due to company-specific news.

Russian meddling in American elections has been a point of concern for Facebook. Last week, 13 Russian nationals were indicted over 2016 election interference. Much of this interference occurred on Facebook and on Facebook-owned platforms, such as Instagram:

The indictment says that the [Russian Internet Research Agency (IRA)] controlled an Instagram account called "Woke Blacks".

"A particular hype and hatred for Trump is misleading the people and forcing Blacks to vote Killary," one message, posted by the account in October 2017, declared.

"We cannot resort to the lesser of two devils. Then we'd surely be better off without voting AT ALL."

The IRA is hardly new. A 2015 expose

This article was written by

J Cooper profile picture
I used to run a Marketplace service called The Growth Operation.  That service has subsequently been moved to Julian Lin, who is highly-skilled in analyzing and evaluating the cannabis investing marketplace.Julian has renamed the service to The Weed Investors, and it promises to continue to be a great resource and community for investors interested in this growing sector.  I am a contributor to Julian's The Weed Investors community.Thank you to each and everyone who previously subscribed to The Growth Operation.  I appreciate all of your support.-J. Cooper

Analyst’s Disclosure: I am/we are long FB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (35)

JOE STERN profile picture
I still like the stock but sold to protect my gain when the media started piling on. It is amusing to me that everyone is so shocked that there is data mining going on in this here establishment. What did they think made the company so valuable? I may buy it back after our government and others establish the ground rules on how users' data can be handled. Until then there will be too much uncertainty.
I could see FB if fully monetized etc in the next decade going to 500 plus per share and maybe splitting.. this a great GARP stock that is undervalued...! long FB !!! :)
sierranvin profile picture
I want to shave Zuckerberg's head, and then put the video on my FB feed... do ya think he'll let me?
I will give you all my shares of FB if you can get buy his bodyguards lol
I don't think he will ever run for office IMO .. He wants to grow the company ! :)
In my opinion, Zuckerberg is bored with Facebook. He is much more interested in running for president with the end game being Vice President. He is not interested in the company, nor the share price.
He is interested in acquiring more shares at cheaper prices. Underpromise overdeliver.
youngdividend profile picture
This is a Peter Lynch stock. PEG Ratio under 1!
Great company and stock growth at reasonable price why anyone would buy junk like SNAP over FB is beyond me Or any of the other junk sticks like Bitcoin related etc Long FB ! :)
socalinvest profile picture
I dont use the platform. but the company is positioning itself to be a top 5 leader on the net.. it's worth holding onto some shares
sierranvin profile picture
Did you include OCULUS in any of your "forward" thinking? Or do you have certainty that it will flop...
I’m long FB. My largest position. I don’t think Oculus is a flop but I do think Zuck overpaid for it by at least 1.5 Bil
JOE STERN profile picture
Good analysis. FB has handled recent controversy and news (or fake news) stories very well. Good PR and expectation management. Great GARP stock.
SwingTraderinSeattle profile picture
Except some junk or penny stocks, investors can get financial gains in the LONG TERM!!!
No Guilt profile picture
I have a FB account. I login a few times per year, some years maybe once, some years maybe 5 times.

I absolutely can't stand that they now send me text messages multiple times per day that so and so posted.

Hate the company and the power users, but I do own the stock.
Go into your account settings or try to talk to support. I don't get any texts from them.
Tigerkz3434 profile picture
You can turn those off within the app under notifications on your iPhone (if you have an iPhone). If you don’t have an iPhone, shame on you! Go buy one right now! Easiest phone in the world to use and update! **shameless plug for my biggest stock**
Ya know you can turn that notification off...right?!
peterinjapan profile picture
Good article. Thanks for being better at math than me.
BAHAMAS1 profile picture
Thanks for the article.

I agree with the fact that FB certainly has a Long Term Upward trend,
however, I disagree with your price target.

FB is one of the cheapest tech / big cap stocks out there today and should have a Price Target
of $250 +...imo.
Tigerkz3434 profile picture
“FB is one of the cheapest Tech stocks” based on what though??
BAHAMAS1 profile picture

Based on their fundamental Growth Rate / Forward Growing earnings... plus a management that knows what the hell they're doing !

Just a basic:
FB is FAR from monetizing their total portfolio.
Their future is buying up apps and copying and pasting features from competitors.
FB is simply social interaction online. From a societal perspective it is as much a positive as a negative like most other social interactions. It is also the wrong lens to view this company through. Rather than trying to decide whether it is a positive or a negative, it is better to conclude that our society lives increasingly online and that FB is a fundamental part of people’s online lives. Given this and the many untapped earning models that this company has their valuation will be a multiple of what it is now longer term. Confidently LONG FB.
Does FB provide value? 1.4B DAUs would say yes. And then the monetization of it has been absolutely epic, yet there is so much potential to capitalize on.
Facebook cannot ultimately be a net positive for people - its always a competition - who has the best life, best car etc. etc. Inevitably people will be filled with jealously and disgust at their own life.

Thats why the changes are stupid, they should have focused on the bottom line and let the controversy run on - its still going on even with all the actions they have taken. There are far better places to put your money than facebook
I enjoy the better dancers, ideas for choreography and costuming. Someone will always be better. Still, people watch the Olympics and even advertise there, so I'm not alone in enjoying people worth admiring. Just find something that is fun to grow at.
Spend_time_in_the_market profile picture
Don't agree. While people tend to portrait their best selves on Facebook, it is the person itself that sees envy or jealousy. If you want to see acchievment or hapiness for other successes, you will.

You'll see what YOU want to see.
sierranvin profile picture
@ the noob: I have 28 cousins, and after years of o connections due to the entropy of life, now connect regularly with some of them. It's a real plus! We are not competing at any level. Your comment borders on the ridiculous. Apparently you are annoyed at flashy comments on FB; well, don't follow the Kartrashians!
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