Facebook Inc (NASDAQ: FB): Yesterday, Yahoo Finance published an article claiming that Facebook had filed a patent for a technology that could enable the company to track where a user is going. If this technology, though controversial, were to become a reality, it would have a massive impact on the value of Facebook (FB). That’s because it would open up new avenues for Facebook to make money from even more targeted advertising. This would help Facebook consolidate its position in the market, and as a consequence, drive up its advertising revenues.
However, whether this technology will become a reality or not, Facebook is a company that investors can bank on, to deliver superior results in the long-run. The company has performed well in the past one year, in spite of the massive challenges it has experienced in its operating environment. In the past year, Facebook has faced increased calls for regulation, linked to personal privacy and the usage of personal data. However, going by its fundamentals, Facebook (FB) is likely to continue giving strong growth going into the future, in spite of an increased sensitivity by internet users with regards to their personal data.
Its industry dominance also means that even if regulations aimed at the social media industry were to be instituted, the company would be the least affected. That’s because, if strict regulations were to be instituted, only companies in a good position to innovate and grow in such an environment would thrive, and Facebook is one of them. That’s because, on top of its strong cash position, Facebook (FB) has a very low debt level. Facebook’s debt is negligible, which means that it can navigate around extraneous circumstances with ease. For instance, the company continues to make a strong showing in earnings in spite of the difficult operating environment driven by privacy concerns.
Most importantly, Facebook’s strong cash position means that the company has room to try out new things, fail and still hold strong. This is a luxury that most companies that don’t have Facebook’s strong cash position do not enjoy.
All these fundamentals make Facebook Inc (NASDAQ: FB) a stock that can hold its value in the long-run. It is both a growth and a stable stock, one that could possibly hold on to its value even in a recession, when most companies go through liquidity challenges.