What a week for the markets, huh?
First and foremost in the minds of most people on Wall Street is the trade war with China – even some of the most seasoned investors are running around like chickens with their heads cut off.
It has a lot people questioning their tactics and what they’ll need to do if the war continues – and what they’ll do if it ends.
That may be the LEAST important financial news making the rounds…
The other is the op-ed piece penned by one of Facebook’s (FB) other founders, Chris Hughes, in which the young multi-billionaire called for the breaking up of the company he helped to build.
It posed an INTERESTING question…
Is Facebook too powerful for its own good? And… if it is broken up – what does that mean for shareholders?
You may be surprised at the answer…
You know there’s a problem when one of the founders of one of the world’s most far-reaching companies calls for it to be broken up due to the amount of power and control that the social media company holds.
He’s not wrong…
Mark Zuckerberg and company have a LOT of control – as they own three of the biggest social media platforms: Facebook, Instagram, and the messaging and communication platform, WhatsApp.
Combined, the daily use of these three apps is in the BILLIONS – and with many people checking their social media sites in upwards of 80 times a day – the total amount of times accessed could be in the TRILLIONS!
That gives Facebook and Mark Zuckerberg a LOT of power…
As evidenced by the SLIGHT smack on the wrist it received for exposing hundreds of thousands of its users’ information to outside entities during the 2016 election.
If Washington didn’t realize how much power Facebook held before those committee hearings – it did afterward…
With some politicians even calling for Facebook to be broken up then!
However, the company seemed to slide through the cracks – or they were just so focused on the Russia collusion story that they totally forgot about Facebook.
But with Hughes calling for his own creation to be dismembered – it has been thrust back in the limelight.
FB shares took an almost 2% hit after the article hit the New York Times site – and for good reason – investors are worried that Uncle Sam will listen to Chris Hughes and go ahead and begin the anti-trust case they talked about last year.
The question is…
From an investor’s point of view? No way.
But from an American point of view – where so much power is being held by one entity – and is controlled by ONE man who has over 60% of the voting shares…
What’s that old saying? “Absolute power corrupts absolutely?”
That’s already beginning to happen with Facebook – as it seems there’s been a crackdown on conservative voices on the social media platform…
So, this has some worried.
If Zuckerberg and Co. can shut down pages on a whim – what’s to stop them from doing it to others?
This is a slippery slope – and it has a lot of people asking that same question that Chris Hughes answered.
“Is it time to break up Facebook?”
What happens if the U.S. government does what Hughes says it should – what happens to the shares that are floating somewhere around $200 a piece?
It’s safe to say that price point would likely drop – drastically.
Even the whisper of an anti-trust or anti-monopoly hearing or case against the company would likely be devastating for share prices.
The term “rock bottom” rings a bell…
However, this may not be as bad as it seems.
If Facebook is broken up and the shares begin dropping like a lead balloon – the shares would become more affordable and more people would be able to buy in.
It would be a real Warren Buffett/contrarian moment – when people are selling, you’re buying. When they’re buying, you’re selling.
So, it could possibly be a good time to get a quality company – which, even if it gets broken up – still has the most popular social media platform on the planet…
It will eventually be fine.
So… is it time to break up Facebook?
Maybe, but that’s for elected officials to decide….
But what do you think?
Do you think it’s time?
Either way – you want to be ready for IF or WHEN it happens – so take precautions either way.
You can join GorillaTrades and wait until our email comes telling you exactly when to buy and exactly when to sell.
We’ve got you covered!
Either way – you should give the Chris Hughes article a read – it’s very interesting and could give you a lot of insight into WHY it might happen.
Until next time…
“Monopolies are bad and deserve their reputation when things are static and the monopolies function as toll collectors… But I think they’re quite positive when they’re dynamic and do something new.” – Peter Thiel