Global Integration Means Global Scrutiny
Phillip is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Facebook (NASDAQ: FB) has made headlines recently by admitting that a bug exposed more than 6 million users of the social networking site. The company said the flaw exposed the users' phone numbers and email addresses.
Facebook faced with challenges
But will this recent spat of bad press affect the stock? No, not really. In fact, the way that Facebook handled the situation by coming out and admitting where it went wrong makes me respect the firm a bit more. It could just have easily allowed the issue to pass without increasing media attention, but it chose to recognize the problem and tell users it screwed up. That puts this company into my ethically sound group of firms, and gives me confidence that it will be honest and open with not only users, but also investors.
Facebook has struggled since going public in May, 2012. I'm wondering if Facebook will ever realize its full potential. After all, it's been more than a year and the stock is down about 28% from its IPO, as other tech firms have soared. The real problem with Facebook is that the stock is overvalued. The founder owns 500 million shares, and there is a massive amount of supply overhang. Nearly every analyst is bearish on the stock, and its earnings growth hasn't increased much lately. That could be a sign of things to come.
Google ordered to delete personal data
The data regulator in Britain ordered Google (NASDAQ: GOOG) to delete personal data from the Street View project. That comes as a surprise to me considering Google is an American company; however, the firm is collecting data from throughout the world, including Britain. This opens up a Pandora's box of scrutiny against the company. But will this really affect Google's stock?
Issues such as these do put a dent in the public perception of the firm, but it's quickly relinquished after a bit of bad PR. However, in Google's situation, where it has possibly infringed upon the privacy of people throughout the world, there is a certain amount of concern over this situation, which can get out of hand. Britain means business, and other state governments could follow. The nation's Information Commissioner's Office on June 21 served Google with an enforcement notice. I'd watch out for more of this type of scrutiny plaguing Google. After all, the company has also faced questions from France about the apparent lack of privacy associated with Google Glass "spyware." But when it comes down to it, the company is really quite strong.
Samsung accused of causing cancer, what?!
Samsung (NASDAQOTH: SSNLF) has faced a slew of criticism for its chip manufacturing plant, from which about 30 employees have said it caused ailment, including a death in 2012 related to cancer. This spells trouble for the company, but so far it hasn't been ordered to make modifications to its plant. In fact, the company only had to pay four years worth of salary to the family of the woman who died from breast cancer, which the South Korean government connected to operations at Samsung.
That type of activity is a threat. But if you are looking to invest in this company, despite its alleged cancer-causing operations, you can be comforted by the fact that the firm has an extremely bullish sales forecast. The firm anticipates $400 billion in sales in 2020, and it looks like this stock is in for a serious ride.
What I'm saying is...
Tech firms are such an integral part of the global economy, and that means global scrutiny. Technology has allowed people to become better connected and share information in an extremely fast and personal way. These firms are trying to make the social integration process easier for people, because that's what we will pay for. However, governments need to keep these firms in check, and when they do, it means bad press and possible stalls in technology development.
It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.
Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google. 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!