Why Should Everyone Invest in FB Stock?

If you turn back the clock to 2012, you would know that Facebook Inc. had just gone public for a price of $38 per share, hence its total value was somewhere north of $100 billion. However, it was only two months after its IPO that concerns about the company’s inability to handle the rising popularity of mobile surfaced and caused FB stock to plunge. These problems caused the FB stock to lose more than half of its value and it ended up at the bottom, priced at $18 per share.

Anyone who made the decision of buying FB stock at those prices is undoubtedly a happy camper nowadays because in the next few years, the share price of the company increased by 600 percent. With that stock, FB stock still remains an irrefutable buy. Why should it be a part of an investor’s portfolio? Listed below are some great reasons to consider it:

Google and Facebook are dominating the world of digital advertising

There is no doubt that the digital advertising industry is massive and it continues to grow at double-digits on an annual basis. The space is already dominated by Facebook and Google, but the two duopolistic companies are expected to grab even more market share. It is true that Google has a bigger piece of the market, but Facebook is expanding its share very rapidly. Facebook’s revenue has already grown as a result and is expected to continue in the same direction, which will undoubtedly do wonders for FB stock.

It is getting better at monetizing

The investors in FB stock under-appreciate one very important metric and that’s average revenue per user. This is for measuring how well Facebook can convert its users into dollars and the social networking giant is getting better at it every year. In recent years, its focus on Facebook video has contributed to the growth of this metric and this venture has become a serious threat to YouTube. Facebook is now able to offer marketers the option of targeted advertising, which has helped in monetization.

Facebook has become good at mobile

As mentioned before, one of the biggest concerns that investors had about the company after its public debut was its inability to shift to mobile. But, by the end of 2016, the number of monthly active users on mobile was 1.74 billion and mobile ad revenue was 84 percent of the company’s total ad revenue, which eased any fears that investors may have had. Worldwide users are now migrating away from desktop and switching to mobile and if this continues, it will catalyze FB stock even further.

Extreme user growth

The massive size of Facebook’s social platform is incredible. Its user base is expanding considerably and has exceeded 2 billion. Yes, the growth will eventually plateau, but the current growth rate is difficult to comprehend, particularly when compared with other social networks. The constant increase in users also gives FB stock a solid boost every time.

The network effect

Investors are aware that it is truly rare to find companies that enjoy competitive advantages. Facebook was able to build this competitive advantage and the network effect is extremely difficult and imposing to duplicate. What exactly is the network effect? It means that a business’s offerings become more useful to consumers as more and more people starting using them. Even though Instagram has certainly grown rapidly, there is no other social network that has such a huge number of users like Facebook, which tempts more people to sign up. The sheer size of Facebook has given it an edge, which is reflected in the FB stock.

Instagram is beating Snapchat

While Yahoo and Twitter are ceding digital advertising share to Google and Facebook, Snapchat emerged as a competitor. It seemed like the most visible threat to Facebook’s dominance, which meant that the network had to find a way to combat its assault. It used Instagram to do exactly that by launching the feature of Instagram Stories and it turned out to be a success. Facebook boosted its efforts to monetize Instagram aggressively after that and it worked quite well, which also helped FB stock.

New and secretive hardware projects

The immense success of Instagram, the billion-plus members of both Facebook Messenger and WhatsApp and the incredible potential of Oculus give owners of FB stock some great diversification. However, Facebook is still not satisfied because the company is reportedly still working on developing new hardware technologies. Some of the rounded products that the company is expected to introduce include a drone, augmented reality glasses, a brain-scanning device and other medical products. It is hard to say until they finally unveil their developments, but any of these products could propel FB stock into a new phase of growth.

Facebook cons are not too alarming

It is a given that Instagram Stories has largely helped in mitigating the threat of Snapchat. Likewise, the ultimate risk that Facebook would become ‘uncool’ and would fall out of popularity in the same way as others, has not happened since its launch in 2004. This has given the social network a meaningful and impressive track record. Furthermore, this risk is further diminished by the network effect with each new person who joins. The biggest risk, which still seems years away, is the deceleration of revenue growth and Zuckerberg’s permanent control of the company due to his consolidated voting power. Luckily, he has turned out to be a masterful CEO and eventually the market will decelerate itself.

Other than these factors, Facebook’s venture in the world of virtual reality is also expected to open up a lot of doors for it in the future. Facebook bought Oculus VR in 2014, the leading virtual company, and it has great plans of using it to expand into other areas. This all will have a huge impact on FB stock and it is expected to increase in the next few years, allowing investors to maximize their returns.