Facebook Inc. (NASDAQ:FB) stock is one of the great investments of the decade, on the surface.
The shares are up nearly 50% just since Jan. 1. Year-over-year revenues also are up 50%, with profits expanding even faster. Some 41% of revenue went to the net income line during the last quarter, and we’re talking about revenue of $9.321 billion.
Thus, writers at InvestorPlace are constantly telling you to buy the stock. Don’t sell because it’s losing the teen crowd, writes James Brumley. The stock can run much higher, writes Chris Lau. The wall of worry, is just another reason to buy the stock, writes Joseph Hargett.
In the near term, all this sounds reasonable. I finally bought into Facebook last October, at a price of $133. I had been a skeptic. Now I’m up 29% on my money. What’s not to like?
How High is Too High?
Facebook says it now has 2 billion monthly active users. Given that China and Iran block it, and that Russians ignore it, the base service is reaching its growth limits. But even if people turn away from the main Facebook service, there are still Instagram, Whatsapp, and Messenger, and all those services come with the same ad services of the main site.
Those ad services can target people with a specificity never known before, not even by Alphabet Inc. (NASDAQ:GOOGL). They not only know where you live, where you are, and what you like, but they know your friends, their likes and dislikes, they know your age and your family situation and whether you have a pet and what it is and probably what pet food it likes.
Anything you share with people on Facebook becomes grist for its mill. In my case, they know my address, where I work, where I worked before, my beat and where I went to school. They know about my politics and my family. They know I care about my alma mater and the kinds of stories I share.
All this despite the fact I don’t use Facebook very much. I drop by a few times a week because there are personal friends I don’t see anywhere else who only use Facebook to contact me. My contributions are mainly professional, but these reveal my personal agenda and what pushes my buttons.
As John Lanchester wrote recently at the London Review of Books, it’s this scaled intimacy that Russian bots and the Trump campaign took advantage of last year to win the election, and what other politicians around the world have been using.
Facebook’s power is passive, but it’s real and it’s pervasive. This has many people gravely worried.
What Can Break Facebook Stock
The most innocuous posts can turn into crime scenes. That’s why many of my younger relatives no longer share personal details on the site. My daughter, who should be at the heart of the demographic, chooses not to post pictures of herself, and my son doesn’t use the site at all.
FB Stock – The Bottom Line
It may be impossible to make Facebook safe, because the world is not safe. But it can be made much safer. That is going to cost money, and the company risks a backlash no matter which way it turns.
But Facebook’s chief foe may be the law of large numbers, the fact that as they grow numbers get harder to move up as fast as before. Thus, Richard Saintvilus sees the stock peaking at about $200 per share.
I agree with him.
Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in FB.