Anyoption analyst Elise Blanford takes a look at Facebook shares, which were up 30% (so far) in 2015. What will 2016 bring?
[divide]
Facebook has been an incredibly interesting stock to watch since its IPO. Following its IPO, the stock fell dramatically and took quite a bit of time to make it back. However, over the past year, we’ve seen incredible gains, and quite a bit has changed with regard to the company. Now, many are asking a big question…
Is Facebook a good investment for 2016?
Today, we’ll take a look at the stock to see if it’s a good place for you to nest your money over the past year.
Facebook’s User Base
As a social network, there is nothing that’s more important to Facebook than users. As we’ve seen with Twitter, when a social network struggles to bring in new users and retain them as regular members of the network, the company struggles in a big way. However, this is not a problem that Facebook has. The sheer size of their user base is incredible. Earlier in the year, the company boasted that it had 1 billion log ins in a single day. To put that number into perspective, one seventh of the entire world’s population logged into Facebook in a single day… that’s absolutely massive! At this point, Facebook has grown from being a simple social network to a part of life for an incredible amount of consumers worldwide.
Innovation
Another thing that gives us an idea of where Facebook is headed over the next year is taking a look at the innovation we’ve seen from the company over the past year. Over the past year, we’ve seen new advertising opportunities, new ways for consumers to express themselves and more. Now, the company is working on gauging the creditworthiness of its users in an attempt to drive another revenue stream. I know, it seems strange, but it’s true. In fact, Facebook recently filed a patent for an algorithm that gauges creditworthiness based on a consumer’s social following. Here’s a quote from the patent…
If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected…
If this new algorithm proves to work out. Facebook has created yet another way to drive massive amounts of revenue from its social network.
Virtual Reality
Another thing that’s important to mention here is that Facebook is branching out of the social media business as well. In fact, it’s getting into the massive industry of gaming. Throughout the year, Facebook has become a major player in the world of virtual reality gaming. This shows that the company is not putting all of its eggs in one basket and it’s finding new ways to drive revenue… even if those ways have little to nothing to do with social media.
Facebook share price performance in 2016. Source: Google Finance.
So, Is Facebook A Good Investment For 2016?
If I was asked to rate Facebook’s stock, I would rate it a strong buy! While the company had a rough time with its IPO, the stock has grown exponentially since, and for good reason. Facebook is the world’s largest social network, and it’s reinvented what we’ve known in the past to be social networks. Today, Facebook members play games, watch videos, listen to music and even shop on their social network. With the incredible innovation and the great results that innovation leads to, there’s no reason to expect anything but positivity from the stock moving forward.
[divide]
The original article can be found on the Anyoption blog.