Facebook is headquartered in Menlo Park, California at the heart of Silicon Valley. However, less than half of the company's 43,000 employees live or work there. In a recent survey, Facebook ranked #30 on a list of California's biggest employers. In addition, the community that exists on Facebook does not share a single city, state, or country of citizenship. The United States is not even home to Facebook's biggest audience. That honor goes to India with 269 million MAUs, nearly 50% more than the company's 183 million users living in the USA. That degree of geographic dispersion creates a political problem for Facebook. The same ubiquitous aspect of Facebook's existence that allowed it to grow so fast could also pose an existential threat. If Facebook is everywhere and nowhere all at once, there are no politicians to protect its local interests. That is why the 2020 presidential election could have a direct impact on Facebook's future profitability. Already, several democratic candidates have assailed Facebook as an example of the type of business that must be more tightly regulated to avoid a repeat of the outside election interference that occurred in 2016. Sell Facebook Now Facebook founder and CEO Mark Zuckerberg has repeatedly stated his commitment to preventing outside influences from accessing user data during the next election. Whether he can make good on that promise, or whether he is sincere, remains to be seen. It may not really matter. Even if next year's election goes off without a hitch, there will still be the suspicion that the victor was somehow able to access Facebook's user data to manipulate the outcome. For that reason, I would not be comfortable holding Facebook stock into next year's election cycle. If you do own it, I suggest either placing a stop order beneath it or buying a put option on it to protect your profit. Facebook has staged a remarkable rally over the past 12 months. Now priced at roughly 22 times forward earnings and more than eight times annual sales, the stock appears fully valued to me. As well as FB has performed in the past, it is unlikely to repeat that performance going forward. Editor's Note: Jim Pearce is the chief investment strategist of our flagship publication Personal Finance. As such, he's one of the smartest investment advisors around. But his article today merely scratches the surface of how Investing Daily can help you build wealth. A case in point is our new initiative, called the "Income Millionaire Project." The goal of this program is simple: Show 1,000 regular investors how to quickly make $1 million in retirement income… without taking on extraordinary amounts of risk. That's $1 million…each. Do the math: we're talking about a total of one billion dollars. Want to get in on the action? There's still time. Click here now for details. |
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