If you look around the investing news space, you'll see one big story everywhere…social media. In each and every one of these stories, we hear about Facebook; and those that don't talk about the social network directly mention it somewhere. With that said, it's easy to see why so many traders are interested in learning more about this stock. After all, tons of media also means tons of price movement and opportunity. Today, we'll talk about how big Facebook really is, why it's gotten so big, and how to trade the trends around the stock. So, let's get right to it.
How Big Is Facebook?
Facebook is a social network; so, it can't really be all that big…right? WRONG! Facebook is massive. As a matter of fact, thanks to the more than 3% gains we saw in the stock today, its valuation is nearly $245 billion! At that valuation, the companies that are worth more than Facebook can be counted on your fingers. They include General Electric, Johnson & Johnson, Wells Fargo, Berkshire Hathaway, Exxon Mobil, Microsoft, Google, and Apple. That's right, there are only 9 companies in the world that are larger than Facebook. Not to mention, Given the average analyst opinion, that number will drop to 5 relatively soon as Facebook stock reaches a value of $120 per share; the average price target on the stock.
What Has Caused Facebook To Grow So Rapidly
When it comes to growth, there are few companies in history that have been nearly as impressive as Facebook. However, what is it that makes the company grow so rapidly? In my opinion, there are 3 key factors associated with the company's overwhelming growth rate…
Strong Focus On User Experience – It could be argued that Facebook had a perfect user experience years ago. However, by focusing on user activities and listing to what they wanted to see, the company has continued to make the experience better and better for the end user. As a result, Facebook has grown to become not only the largest social network, but a way of life. The average consumer that uses the social network isn't just talking to friends and family, their reading the news, watching videos, playing games and more. As a result of the strong focus Facebook has placed on user experience, their user data continues to grow at an astonishing rate as we see quarter after quarter.
Focus On Profit – While Facebook has focused on the end user's experience, that doesn't mean that the company has forgotten to be profitable. Quite the opposite is true to be exact. Throughout the history of Facebook, we've watched as the company has evolved the way it advertises time and time again; and they continue to do so. As a matter of fact, there's quite a bit of excitement among investors with regard to the company's plan to launch interactive mobile ads. Considering the fact that standard mobile ads are worth around 10 times more than standard text ads, this is likely to bring in quite a bit of revenue for the company and its investors!
Investor Sentiment – Keeping the two factors above in mind, it's hard to imagine a reason that investors wouldn't be excited about this company. As a result, investors are willing to pay more for their stake in the company!
How To Take Advantage Of Trends Around Facebook
The bottom line is that overall, Facebook is bound to continue growing. So, the best way to trade the binary options on the stock is to wait for pull backs that reach support. Once this happens, purchase a call as the stock is all-but guaranteed to rise in value from there!
What's Your Opinion?
Do you think Facebook will continue to grow? Why or why not? Let us know in the comments below!