US Stocks

Facebook’s stock dip is only temporary

Every dip in the FB stock is a chance to get the stock for the long term.

One of the top social media stocks, Facebook (NASDAQ: FB) has drawn a lot of controversies lately and investors are panic selling. FB stock is showing volatility and has left investors worried. Every dip in the FB stock is a chance to get the stock for the long term.

This is the age of social media and Facebook has been around for a while. FB stock is up 29% over the past year and has gone from $260 to $339 today. The stock had surged to its all-time high at $384 last month but has tanked lately. I believe this is a great opportunity to enter and buy the dip in this social media giant. With that in mind, let’s dig deeper into the catalysts driving the growth of FB stock.

Stellar Numbers

Investors are always concerned about the fundamentals of the company. Controversies are temporary but numbers are proof that the company is not going anywhere for a long time to come. I am confident that Facebook will report strong numbers this quarter. The company’s profit in the second quarter doubled year over year and hit $10.4 billion. It also saw a 56% surge in advertising revenue. As digital marketing activities resume and advertisers start to spend money on the platform, the revenue is only going to increase.

It has outstanding management and it would take major mistakes from them to break the growth momentum of the company. No company is foolproof and I agree Facebook has faced many controversies but they have navigated the waters well.

Smart investors take advantage of every dip in quality stock and Facebook is just that. The company will report third-quarter earnings next week and this is when the stock could rally. Analysts are expecting a tremendous quarter.

It’s The PR

All was not well with Facebook and the company did end up in a huge controversy. The Journal recently released a report named “The Facebook Files” and it showcased the inability of the company’s algorithms to identify the racist rants, and also stated that the company encourages conflict for personal profit. It emphasized that Facebook does not tag and take down hate speech every time. It is only a small, single-digit per cent that is taken down.

Even in the past Facebook has dealt with controversies and it is not new for the company. Negative news and PR immediately lead to a dip in the stock but it is temporary. The company has already been through a lot and it has managed to handle it well.

Do not forget that Facebook users are not limited to one country. There are global users and what might seem important in one country may not be equally important to another. There are billions of users who are here and are going to stay.

The Bottom Line

Despite the grilling and ongoing controversies, one thing is certain- Facebook remains a profitable business and is one of the top social media companies in the world. With a user base of 2.8 million, Facebook is here to stay. As long as the company attracts and retains users, advertisers are going to flock to the platform.

It generates massive revenue through advertising and is one of the top choices for advertisers. The growth may slow in the second half of the year but the advertising revenue is going to continue to grow.

FB stock has a long way to go and it is one to hold for the long term. The negative news and controversies will fade but FB stock will continue to grow.

There is nothing to worry about the future of Facebook. The stock will rebound very soon.

Not Investment Advice Indie Investor is for general information use only. It must not be relied upon by readers when making (or not making) their investment decisions. If in doubt you should seek advice from a professional financial adviser.

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