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I Want to Own Facebook Stock, But…

0 | By Shah Gilani

There was a time when Facebook Inc. (NasdaqGS:FB) was one of my favorite stocks. I mean, I loved it and thought it would be something I’d probably never sell.

Then, all kinds of negative press hit the stock – and my opinion of its worth.

While I’m presently out of FB, I want to buy back in at some level.

The problem is I don’t think the company’s cleared the hurdles that brought it down. The stock probably has lower to go.

FB has made routine mistakes, and one particular lame maneuver it just pulled says a lot.

Here is what’s holding me back from buying the stock and what you can do in the meantime before jumping in…

Tell It Like It Is

Being a Wall Street guy, I read a lot. It’s my job to stay on top of, well, just about everything having to do with the Street, the markets, companies, compliance, and valuation metrics. And while most of what I read is informative and interesting, there’s not a lot that’s really insightful.

However, there’s Zero Hedge.

Zero Hedge, written by Tyler Durden (wink-wink, if you know who Tyler Durden really is, or isn’t), has great insights, very often into arcane aspects of inside-the-ropes kind of stuff going on across Wall Street, in the markets, on deals, with players, etc.

So, when FB denied access to Zero Hedge last weekend, at first, I thought it was a mistake. Then I thought it was a problem. Then, finally, I thought it was confirmation that FB hasn’t gotten its house in order – and that it was probably indicative of why the stock’s likely to remain under pressure.

On Tuesday this week, Tyler Durden wrote, “Over the weekend, we were surprised to learn that some readers were prevented by Facebook when attempting to share Zero Hedge articles. Subsequently, it emerged that virtually every attempt to share or merely mention an article, including in private messages, would be actively blocked by the world’s largest social network, with the explanation that ‘the link you tried to visit goes against our community standards.'”

Of course, I got to Zero Hedge by going directly to the zerohedge.com site, where I found Tyler’s explanation of what was going on with Facebook.

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He went on to say, “We were especially surprised by this action as neither prior to this seemingly arbitrary act of censorship, nor since, were we contacted by Facebook with an explanation of what ‘community standard’ had been violated or what particular filter or article had triggered the blanket rejection of all Zero Hedge content.”

The reason I like Zero Hedge so much is because they get it, which Tyler proved to me yet again by then saying, “To be sure, as a for-profit enterprise with its own unique set of corporate ‘ethics,’ Facebook has every right to impose whatever filters it desires on the media shared on its platform. It is entirely possible that at least one post was flagged by Facebook’s ‘triggered’ readers who merely alerted a censorship algo, which blocked all content.”

That’s pretty free-market cool in my book. And I agree with Tyler.

The problem is it’s too generous.

If You Can’t Beat ‘Em, Do This

It struck me, being an avid reader of Zero Hedge, that there’s nothing on the site that I’d ever seen that warranted FB’s censors thinking something, anything on Zero Hedge would have or should have been construed as going against their “community standards.”

But I wasn’t right.

And Tyler immediately pointed out how wrong I was and how Zero Hedge might have gone against FB’s standards.

The very next paragraph, Tyler explained, “Alternatively, it is just as possible that Facebook simply decided to no longer allow its users to share our content in retaliation for our extensive coverage of what some have dubbed the platform’s ‘many problems,’ including chronic privacy violations, mass abandonment by younger users, its gross and ongoing misrepresentation of fake users, ironically – in retrospect – its systematic censorship and back door government cooperation (those are just links from the past few weeks).”

That’s why I love Zero Hedge. They tell it like it is.

And that’s why I’m scared to plow back into FB stock.

They’re having trouble figuring out what standards to operate under.

FB’s repeatedly stepped on its own feet, and Mark Zuckerberg has repeatedly looked like a you-know-what, while repeatedly stepping on his own… feet.

Ditto for Sheryl Sandberg, stepping on her own… feet, that is. As FB’s Chief Operating Officer, she’s repeatedly backed the company into the wrong corners and scared investors in the process.

Tyler Durden said Zero Hedge doesn’t know what event precipitated the censorship, and that attempts to get feedback from the company have “remained unanswered.”

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He rounded up his post on Tuesday by saying, “We would welcome this opportunity to engage Facebook in a constructive dialog over the company’s decision to impose a blanket ban on Zero Hedge content. That said, with Facebook increasingly under political, regulatory and market scrutiny for its arbitrary internal decisions on what content to promote and what to snuff, its ever-declining user engagement, and its soaring content surveillance costs, such censorship is hardly evidence of the platform’s ‘openness’ to discourse, its advocacy of free speech, or its willingness to listen to and encourage non-mainstream opinions, even if such ‘discourse’ takes place in some fake user ‘click farm’ somewhere in Calcutta.”

In a nutshell, that’s why I question the worth of FB at this juncture.

Until it gets its house in order, in terms of:

  • How it defines community standards,
  • How it determines what’s real or fake,
  • What it does to address the myriad related privacy problems it has and how much regulators in Europe are going to fine the company,
  • And how it’s ultimately going to be regulated in the U.S. and globally…

… I’ll be sitting on the sidelines with my cash in hand.

When I think the dust has settled, I’ll jump in and I’ll tell you when.

But, until then, here’s what you can do:

Sometimes the best money you can make from the markets comes from the crappiest of companies.

That doesn’t necessarily mean that they’re hurtling towards bankruptcy, are so steeped in scandals that everyone’s got their spyglass on them, or that they’re run badly.

Sometimes it just means that their names can’t stay out of the news… like someone we know.

With a special type of trade, something I call a carbon trade, you can keep making thousands of dollars from a single company – over and over again – like a carbon copy. And this can often extend years into the future.

So if you want to learn about carbon trades and which companies are best for them, click here to learn more.

Sincerely,

Shah

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