E Despite Privacy Issues, Here's Why I Still Like Facebook

As a social media company Facebook (FB) has a lot of spotlights shown on it whether for good or for bad. But as a part of everyone’s daily life the company realizes that it is a big part of society and can be pulled into civil situations which it never intended to enter because of its ubiquitous nature. One such high profile case that the company was pulled into recently was regarding the search warrant for its customer base and I’d like to examine what it might mean for the company.

In a recent Social Security fraud investigation the company was dealt search warrants where the authorities required that the company turn over information on Facebook’s consumers. While performing their due diligence on disability services the government noticed that among some of the perpetrators were individuals who had filed for disability services but had Facebook profiles that appeared to show they were perfect health relative to the disability they were applying for.

The government naturally asked Facebook to open their files on particular individuals and Facebook obliged, but obliged reluctantly by challenging the search warrants. Facebook filed the motion in the Court of Appeals in New York but lost on the ruling predicated on the notion that it actually had no right to an appeal on the situation.

You can only imagine that Facebook is upset about the ruling because if any agency now comes knocking on the door it must come to the door and open. So from a trading perspective what this ruling implies is that if the mass consumer realizes that their online presence isn’t really secured they will not be utilizing the platform all that much anymore. With a less captive audience Facebook will have less opportunities for ad dollars.

This bit of news brings me back to the San Bernardino shooting which occurred almost eighteen months ago when I’m reminded of when Apple’s (AAPL) Tim Cook fought vehemently fought against authorities in unlocking the shooter’s iPhone because if he ended up unlocking the phone this one time it opens Pandora’s box in the future of having the government ask corporations to invade people’s privacy more often. All the social media giants and tech companies were united on this front with Tim Cook in an effort to protect the online privacy of their customers so this situation where Facebook allowed authorities to come into their house for the information in this case surprises me actually.

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Joe Economy 3 years ago Member's comment

Great article, thanks!

Facebook is a great stock to own because it is a company that is expanding at such a fast rate with virtually no other competitors doing what they do so well.

As long as FB continues to grow in exponentially in users and re-injects cash by investing in buying out smaller companies that complement its own technologies, there will be no stopping the stock.

Currently FB is forecasted to grow at a cracking 45% in the current quarter! I might be wrong but it seems it has $0 debt and total cash of almost $30 bn as of the last 2016 income statement. Perhaps what to look out for next is a stock split? Failing any major privacy or moral mishaps, the stock should continue to grow.

If you have a teenage kid, chances are he or she is spending a majority of their time on FB when using a smartphone. For better or worse.