Facebook, Inc. (NASDAQ:FB) will eventually become one of the most successful technology growth stories in human history. The company is rapidly dominating the market for human social virtual interaction via its ability to produce solutions that are innovative. My long-term investment thesis for FB stock is extremely bullish.
Not only does Facebook continue to rapidly accelerate the growth of its user base that stands at more than one billion unique users worldwide, but CEO Mark Zuckerberg has built a powerhouse global presence in social media and that still doesn’t include China.
While Facebook users actively go on their profiles to keep in touch with the world, the development that has really impressed me has been the gargantuan success of its “Messenger” platform.
Facebook Messenger is not new technology, as Apple Inc. (NASDAQ:AAPL) offers its own “iMessage” platform that is fairly robust as a real-time text, picture, and voice messaging service used for communication between iMessage users.
I actively use iMessage and it is a great product, but what Facebook has that Apple can only hope to achieve is its one billion-plus users.
Facebook Is Light-Years Ahead
Messenger currently has about 800 million active monthly users and is growing exponentially. The userbase is only trailing the 900 million using the “WhatsApp” messaging platform that is also owned by Facebook.
I doubt Apple will be able to get near to these metrics.
While Apple has made its iMessage available to “Android” users, I simply don’t feel it will be enough to override the enormous userbase that loves Facebook.
What you can do with Facebook Messenger is expanding and could eventually lead users to cut their ties with fixed-line phone services, if they have not already done so. Messenger allows for HD-quality voice and video calls to anyone around the world for no fees, as long as you are on a Wi-Fi network.
The calling feature essentially will also make Microsoft Corporation’s (NASDAQ:MSFT) underutilized “Skype” voice, video, and texting platform more of a non-factor. With Skype, you are charged to make any calls or texts, unless it’s to another Skype user. In my view, Microsoft failed to make more of this high-potential platform.
With Messenger, you can also send real-time pictures and videos, buy products online, set up a meeting spot, transfer and receive funds, and send voice messages.
And we know the creative minds at Facebook will continue to innovate the Messenger platform and make sure it continues to be the best experience for billions of users.
This means FB stock will be able to benefit from the further monetization of its userbase via mobile advertising to drive revenues, which has proved to be a game-changer for the company.
The Next Step for Facebook Stock
Given the current turmoil in the stock market and the technology stocks, the risk of near-term price volatility is high.
FB stock is down less than 10% from its highs, so it is holding up fairly well compared to some of the other brand-name technology issues.
Additionally, Facebook has easily outperformed the S&P 500 and NASDAQ 100. The chart is displaying a bullish Golden Cross with the 50-day moving average (MA) above its 200-day MA.
Yet there is downside risk, given the range low of $72.00 was on August 24. Whether we will see those levels again is unknown, but the upside potential is high in the long-term.
Chart courtesy of www.StockCharts.com
As a trader, to look at playing a stock like Facebook, Inc., you could accumulate on weakness below $100.00 per share.
Alternately, an option strategy could be to sell lower-price put options to generate premium income and hope to buy at a decreased price.
If you own a position like FB stock, you could sell covered calls on your position to set a target selling price, while generating some premium income.
Of course, these strategies should not be construed as a recommendation, but simply an example of an investment strategy that readers may consider for a stock like Facebook.