Should I Buy Facebook Stock Right Now?

Facebook Inc. (NASDAQ: FB) is down more than 23% year to date. And the reason for this dip is more than just a global pandemic.

On March 31 (Tuesday), it was reported that Zoom Video Communications Inc. (NASDAQ: ZM) was illegally providing user data to Facebook. That's even for users without Facebook accounts.

Zoom is now facing a lawsuit, while Facebook could take even more of a hit in the coming weeks.

This raises a question that's been asked countless times over the last three years: Should I buy Facebook stock?

With so many stocks at a discount right now, investors are looking under every stone for the best value buys. Some have speculated that Facebook is one of these.

We don't know if the coronavirus bear market has found the bottom yet - it likely hasn't. But we do know it's the "buying opportunity of a lifetime" for some stocks.

Even if we haven't found the bottom, buying certain stocks now could help you "average down" your cost, as Money Morning Capital Wave Strategist Shah Gilani puts it. This is how long-term wealth is built.

That means some stocks could double or triple your money in five years if you start building a position now.

And we've found a stock that isn't just better than Facebook - it will outlast Facebook...

Why Facebook Is Not a Buy Right Now

The Facebook stock price was taking wild swings long before the coronavirus pandemic. In fact, all the pandemic has done is reveal just how frothy FB gains have been.

It's been up and down over the last few years. It lost 20% in March 2018, gained 30% that July, and then lost 40% by December. Then FB spent all of 2019 gaining 50%.

People are enamored by Facebook's targeted ad business, which has carved out a massive 20% share of the digital advertising market.

But that market share relies on Facebook keeping its user base. And Facebook has been pushing users away.

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The company has had trouble since the Cambridge Analytica data breach in 2017. It was referred to on the FOX Business Network as Facebook's "Equifax Moment."

We at Money Morning have even likened it to an Enron.

Facebook lost a about 15 million users after the privacy scandal. And since then, its legal problems seem to have only gotten worse.

In March 2019, a criminal probe was announced into two of Facebook's data deals with unnamed partners in New York. In April, Hundreds of millions of Facebook records were found to be stored on Amazon cloud servers.

The company tried to save face through different news outlets after the cloud server news. But it was only met with another scandal later that month. Facebook admitted to uploading 1.5 million user address books without consent. That means there's a chance they downloaded all of the contacts on your phone without telling you.

Then, in June 2019, 25 million Android phones were infected with malware from Facebook-owned WhatsApp.

For these reasons and more, Facebook CEO Mark Zuckerberg has been in and out of court for a long time. Congressman David Cilline even accused Zuckerberg of lying about how much control users have over their data.

But if anything's clear, Facebook has suffered through terrible optics. The company is experiencing a mass exodus of users, and its ad revenue will suffer as a result.

Unlike Facebook, however, there is a company sure to benefit from the growing digital ad space. Check out this stock instead...

The Better Stock to Buy Instead of Facebook

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The Trade Desk Inc. (NASDAQ: TTD) takes what Facebook does best - selling targeted ads - and does it even better. Unlike Facebook, it will still be around when this $725 billion market hits $1 trillion.

This company has an extremely valuable ad software that uses artificial intelligence to help agencies buy digital advertising more easily. It makes sense of big data so ad agencies can optimize their ads for precision and reach.

The platform allows ad agencies to bid in real time for ad space that meets their criteria, instead of negotiating in person for space that is "close" to the target.

The platform also covers a wider range of media than Facebook ads - including TV and audio. In 2019, Inc. (NASDAQ: AMZN) made it so Trade Desk ad inventory could be purchased through Amazon Fire TV devices.

Companies like Roku (NASDAQ: ROKU) (a favorite at Money Morning), LinkedIn, and ESPN have also jumped on board with this company's solutions. Trade Desk estimates that media spending from companies like these could quadruple every three years.

Revenue for Trade Desk is poised to hit $863 million by the end of 2020, despite the coronavirus outbreak. That's 1,817% growth since bringing in just $45 million in 2019.

That gives you a ground floor opportunity on a company that will be indispensable going forward.

Investors can pick up shares of The Trade Desk for $167 today. Analysts say it could reach as high as $340 by the end of the year. That's a shot at 103% profit.

Action to Take: Is Facebook a buy today? Absolutely not. The stock is down more than 20% on the coronavirus outbreak, but that's on top of legal issues that are boring the company into the ground. Instead, look for shares of The Trade Desk (NASDAQ: TTD) at $167. TTD offers 103% profit potential this year. And this company has only begun to dominate the digital ad space.

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About the Author

Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.

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