Facebook Stock Forecast: Facebook Is A Strong Buy

Why Facebook Is A Strong Buy

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary:

  • Privacy issues still haunts Facebook. After Apple asked Facebook to remove its Onavo Protect iOS app last year, Facebook came up with another data-gathering app.
  • Facebook is reportedly paying people to use its new Research mobile app so it can gather personal data and mobile phone usage habits.
  • On the other hand, it shows Facebook is still bullish on data gathering to augment its already dominant position in digital advertising.
  • I opine that people understand that nothing is free in this world. Companies like Facebook and Google data mining in exchange for free apps/services.
  • I also like Zuckerberg’s plan to integrate/merge Facebook Messenger, Instagram, and WhatsApp.

I give Facebook’s (FB) stock a strong buy rating. I like Zuckerberg’s cunning and hungry-for-more attitude of Facebook. After privacy issues helped pummel down FB’s price last year, Facebook is again on the spotlight for reportedly paying people $20/month to install its new Research iOS app. Facebook gives another $20 (one-time) for every friend that a user referral. It means a Facebook Research installer who can recruit 100 of his/her Facebook friends to install Facebook Research; he/she can get $2,000.

Facebook has $41.21b in cash & short-term investments. It can afford an experiment that can help boost its leading position in digital advertising. Facebook paying people to use its mobile app is not that different from Bing Rewards from Microsoft (MSFT).

Source: Seeking Alpha

Gathering more personal data and the mobile/web habits of people can help Facebook sustain its hyper-growing advertising-driven revenue streams. The ad placement buyers of Facebook needs more personal data so their paid targeted ads gets more return of investment.

We can clearly notice based on the chart below that Facebook’s revenue growth will slow down. However, Facebook adding more ad buyers to its customers list can decelerate the decline in its annual revenue growth rate.

Source: Finbox.io

Targeted Ads Require Persistent Personal Data Gathering

Like its rival Google (GOOG), Facebook is doing its best to keep growing its massive collection of personal data and mobile/web habits of people. Facebook is still a far second to Google when it comes to digital ad sales. eMarketer expects Google to hits $102 billion in global digital ad sales this year. Facebook’s estimated sales in 2019 will only reach $67 billion.

Source: eMarketer

Unlike Google, Facebook has no super-dominant search engine and Android OS platform. Facebook needs to be more creative on how it can collect more personal data from smartphone/tablet users. Facebook Research is Zuckerberg’s clever idea to get around Apple’s (AAPL) banning of its data- gathering Onavo Protect VPN (Virtual Private Network) iOS app last October. Like Onavo Protect, Research is also a VPN-like service that monitors/gather users’ data traffic and personal information.

By using beta testing third-party app testing platforms Applause and BetaBound, Facebook circumvents Apple’s more restrictive privacy policy. Apple clearly cannot ban iPhone/iPad owners from electively installing any iOS app that will pay them money. Apple also knows that Applause and BetaBound are some of its paying customers who use incentivized app installs. Paying people to install and use a mobile app is fair practice in the marketing industry.

Applause’s User Agreement on Research iOS app clearly states that installing the said app will let them collect information. The client being referred to is obviously Facebook.

Source: Applause/9to5Mac

Conclusion

It doesn’t matter if Facebook pulls down Research app or not. It can keep making mobile apps using third-party companies like Applause and BetaBound. What matters most is that second-ranked digital advertising leader Facebook is very hungry for more data gathering. The insatiable appetite to collect more personal data and online/mobile habits of people makes Facebook a worthy long-term investment. Emulating Google’s gather-everything approach toward personal data gather is a super-strong tailwind for FB.

Facebook’s paid social media study app is a reminder to Apple that it cannot dismiss the free will of iPhone/iPad owners. Getting paid $20/month (+$20 per referral install) can help iOS device owners spend more on in-app purchases, or maybe pay for subscriptions to Apple Music and streaming video service.

Another reason for my bullish sentiment over FB is Zuckerberg’s brilliant plan to integrate/merge Messenger, Instagram, and WeChat. This is again him wanting to gather more personal data and phone habits of messenger apps users.

My buy rating for FB is in-line with the bullish one-year algorithmic market trend forecast from I Know First.

How to interpret this diagram

Past I Know First Forecast Success with FB:

On September 15, 2017, I Know First published a premium article saying that it’s time to Buy Facebook’s Stock. I Know First has been bullish on Facebook’s stock on all of the three time horizons. We suggested that Facebook Watch service last month would boost the advertising revenue of 2017 $36 billion. In fact, Facebook stock price jumped up by 5.39% in three month following the forecast below. I Know First algorithm successfully predicted the movement of the Facebook stock price.

Current I Know First subscribers received this bullish FB forecast on September 15, 2017.

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Please note-for trading decisions use the most recent forecast.