Why Investors Should be Confident with Facebook

Josef Ray is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Confirm or deny it, Facebook (NASDAQ: FB) still rules. And why shouldn’t it? As of the Dec. 27 the most popular social networking site in the world is applying for a trademark on the word “poke," an action which, in the network, allows members to get the attention of their contacts via the “Poke” button. The very gumption of this action speaks volumes about the power of Facebook. To date, Facebook has been the leading social network, permitting over a billion members to share various kinds of media with one another, transmitting the said media for the past several years.

The Beginning of a Life-Changing Technology

Its humble inception as a network that started within founder Mark Zuckerberg’s dorm room is impressive compared to what Facebook is now. FB has essentially revolutionized the way people share information, circumventing the relative informality of e-mail and the staidness of your conventional file-sharing platforms while making the whole system easy to use. The Facebook “poke” and the prospective trademarking thereof only show the strength of the brand, and the fervor of those who use the  social network and this specific aspect of it.

Yes, shares of the social network may have been a tad lackluster, as evinced by their fall in value in the early part of Dec. 27. However, the very same trading day saw prices rebound considerably to compensate for the brand’s interim shortcomings. Specifically, FB shares traded down $0.24 from its previous $26.67. For Dec. 28, stock price is at $26.05, down about $0.46 and almost 1.75 percent.

Competitors Have Been Pushed to the Edge

As of yet, there is no viable competition for the Facebook social network. Overall, the past few years have been kind to the network. Other network sites like Myspace and Multiply fell by the wayside, giving no solid alternatives to users aside from FB, with 2012 proving especially generous to Zuckerberg’s brainchild.

LinkedIn (NYSE: LNKD) may be a tad famous for being known as the world’s largest professional network for business executives, supervisors, doctors, lawyers, and other pros in a variety of industries, but its focus, audience, and user interface, sadly, have seen those seeking to advertise their wares and services flock to Zuckerberg’s site. Although LinkedIn has only about 187 million users, its dedicated sphere of involvement made it quite popular in over 200 countries, along with its apps available in about 20 languages. Ever since its IPO back in January 2011, it was able to acquire social networking linking services Rapportive, along with the SlideShare, for over $119 million. Establishing “connections” with the site can be used for building up portfolios, easy sharing of company or professional profiles, hastening the process of background checks and job applications, and so on.

Google (NASDAQ: GOOG) may have tried to launch its own social network Google+, but that effort proved to be a flash in the pan despite impressive resources and intuitive, smooth usability from the short-lived offering from  the search engine giant. Users have experienced the power of features like multi-video conferencing called “Hangout,” sorting friends and contacts through “Circles,” and even and connecting with others through “Hashtags” and “Trends,” such as what can be found in Twitter. Although there are new things that are offered in Google+, familiar functions like +1’s and sharing means it's still running in Facebook’s shadow.

Facebook’s Performance in the Market

Facebook's opening price at first offering may not have moved much, closing at the initial price on the IPO day, but there are no apparent heirs to the throne. It may have struggled with hitting the balance of profitability and quality of user experience, but it has done comparatively well in terms of revenue and the aforementioned balance, in addition to making the site easily accessible on mobile devices such as tablets and smartphones. You could notice that it has gone a long way from experiencing the price slump back on the last week of August where it is steadily reaching its full potential, bringing back the level of market enthusiasm when it was first offered in mid-May.

Thanks to competitors that are lagging with the improvements and innovations that may interfere with the progress of Facebook’s growth, investing in it makes it a winning choice, even in the long run. Investors can sit relatively easy due to the lack of competition in the foreseeable future. With over 1 billion users and counting, as well as efforts of reinventing the site for user experience, there is confidence that the world’s leading social networking site can make investors happy.


JosefRayDagatan has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google, and LinkedIn. The Motley Fool owns shares of Facebook, Google, and LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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