According to Facebook founder Mark Zuckerberg, he didn't intend to start a business. He merely wanted to solve a problem at Harvard by connecting people he cared about.
I was born in the middle of the night, just not last night.
I think there's a good case to be made that Zuckerberg and his team have lied about damn near everything. Repeatedly. Intentionally. Often.
I'm not alone, either.
A quick Internet search suggests the "Zuck" and his team have lied about so many things so often that they've lost track of the lies they've told.
That's very, very dangerous for investors.
Unless, of course, you're prepared for profits ahead of time...
Let's Get This Straight About Facebook
Facebook is not the "Holy Grail" of technology companies, social media, or even technology providers that many investors want to believe it is.
At the risk of being called a heretic (yet again), the company is nothing more than a clearing house of voluntarily contributed personal information that is weaponized against the users who contributed it in the name of advertising, data selection, and political manipulation.
Think of an old-fashioned phone book but with multiple pages behind each listing.
It's not secure.
It's not private.
It's not exclusive.
YOU and your information are for sale.
To the highest bidder, or the lowliest lowlife in many cases, without your permission.
Amazon.com Inc. (Nasdaq: AMZN) got access to nearly all of your friends, as did Microsoft Corp.'s (Nasdaq: MSFT) Bing. Yahoo!, meanwhile, got real time access a la the voter quiz app, cooked up by Cambridge Analytica. Even Yandex, the Russian search engine, had access.
That's not even the dirty part, though.
Facebook's app can reportedly re-grant itself access to your most personal data even when turned off. That explains a lot about why Facebook is so very comfortable with phone markers and why the program is so hard to get rid of, even if you want it gone. I tried, for example, and it's all but impossible to delete, depending on which smartphone you have.
The situation is so serious that the UK-based Register reports Facebook even gave secret access to device makers that bypassed protections intended to prevent them from tying together friends and their friends.
Old news?
Not.
Supposedly Facebook is reining in such nefarious business practices, yet more than 100 Facebook app developers apparently had access they shouldn't have as late as November 5, 2019. That's when Konstantinos Papamiltiadis, a Facebook employee posting at Facebook for developers, noted the company was "reaching out" to stop it.
November 5th... 2019??!!
This is more than 12 years after consumers started to voice concerns about what's happening to their most intimate information and a year after CEO Cheryl Sandburg told Congress during a hearing that the company would only operate in "a country where we could do so in keeping with our values."
Evidently, the rule of law isn't one of those things, considering that the company operates in places like the United Arab Emirates, where people who criticize the government simply disappear. Or, worse, get "disappeared."
Not that I'm surprised, but Zuckerberg himself seems to be avoiding travel to less exotic locations like - oh, I dunno - London, England or anywhere in the UK, where he could be detained for repeatedly failing to comply with that country's Parliamentary hearings requisitions. That's via more than 7,000 internal Facebook files that were leaked and which apparently reflect his desire to avoid such unpleasantness.
The company doesn't apparently just treat customers with disdain but vendors, too. News broke last month that Facebook will pay $40 million to settle a score of advertiser lawsuits alleging that the company overstated video views by as much as 900%.
Not 5% to 10%... 900%.
I get making a buck. In fact, I'm all for it, given what I do for a living, but selling out your ethics and lying about it is another thing entirely.
Anybody who uses Facebook is going to get "Zucked" sooner or later.
My turn, funny enough, came last week.
I set up a personal Facebook profile and related messenger account only to have both hacked within 72 hours. Seventy-two freakin' hours... then some joker had snarfed a few of my pictures and set up a messenger account to begin phishing my friends.
Zuckerberg went from merely being somebody I distrusted based on his professional behavior to a complete you-know-what in seconds.
I deleted my account immediately. Just like one in four Americans already have, according to a Forbes study.
It's worth noting that the number jumps to nearly half or roughly 44% of people between the ages of 18 to 29, which is, in turn, roughly 4x the number of users 65 and older who are ditching the social media giant.
This hasn't had a material impact on Facebook's stock yet, but I think the day of reckoning isn't far off.
Facebook is the next MySpace.
I know that's unthinkable, but the fact that so many people regard this as an impossibility is what catches my attention and why going against the grain could be a great trade.
Facebook is under tremendous pressure legally. Users - myself included - remain vulnerable to theft and data exploitation.
To say that Facebook is scandal-ridden is an insult to actual scandals.
Mark my words, Facebook will end up being an unmitigated disaster when viewed through the rearview mirror a few years from now. The hate factor is rising, and you can see that reflected in the $23 million the company reportedly spent on personal security for Zuckerberg last year.
MySpace users, in case you don't recall the story, lost access to their own data progressively just as Facebook is systematically stripping users today of theirs. News Corp. bought MySpace for $580 million in 2005, yet sold it for a mere $35 million just six years later.
It was, according to executives at the time, supposed to be the beginning of a data set rivaling Google and Facebook. Now it's more like, "My.... Who??!!"
Think about it.
Facebook wants you to believe you're interacting with friends and sharing information the way you would with your grandparents. Only the company is systematically stripping you of your identity the entire time you use it.
Then there's Facebook's planned cryptocurrency project Libra. Billed as a global payments solution, in reality Libra is simply "Zuck Bucks." Like the Borg of Star Trek fame, you will "be assimilated" if you use it and resistance will truly be futile.
Normally I don't agree with a damn thing that comes out of his mouth, but I think billionaire trader George Soros has it right when he called Facebook a "menace to society."
Now what?
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Shorting Facebook stock is still very much a "widow-maker" trade at the moment, meaning most people are going to lose money trying to bet against the hope and fantasy Team Zuckerberg peddles as long as the quarterly numbers are even half decent. Doing so is also an unlimited risk trade.
A simpler way to do it is to buy bearish put spreads or sell bearish call spreads every time the stock peaks above its 10-week exponential moving average and encounters a prior resistance level. That's roughly 70 days on a daily chart as outlined here and roughly where the stock is as I type.
Be warned though, this is one of those trades where you may have to try three or four times before you get it "right" - meaning you and your money are well positioned for the fall I see coming.
The trick with trades like this is to keep risk levels small while the downside momentum you're after builds.
Pile on - meaning add to positions - only when momentum really begins to build to the downside, and the "Greedy *astard" Target comes into play around $175 a share or so.
It's also important to remember that a trade like this is extremely speculative, so keep risks small by using the 2% Rule we've talked about many times over.
At the same time, you'll also want to remember that this is a trade millions of folks including some very well-placed Wall Street money makers won't want to see happen, which means they're going to use every trick in the book to keep prices high in an attempt to separate you from your money.
Ultimately, they'll fail.
At that point you're the one who could be laughing all the way to the bank.
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The post The One FANG Stock that COULD Actually Fail (and How to Play It) appeared first on Total Wealth.
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About the Author
Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.