Question

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Question: As an investor in a social network such as Facebook, discuss TWO risks/factors that could damage the future growth potential of the social network. Support your answer with examples.

Answer 1

Social media's future is shifting. By 2020 it is estimated that an additional 3 billion people will have mobile connectivity. In addition, growing numbers of people use their Smartphones to access social media. This is why future systems are planned from the very beginning with smartphones in mind.

Investors of Facebook will have an incredibly fast-growing business of massive unexploited growth potential. The holding of the stock is definitely not riskless. The complexities of rising government regulation will hamper this giant.

When investors claim that they are willing to invest at little to no risk, they usually want to protect the value of their investments and all interest or other capital gains. They want to learn that the economy and stocks are not falling, even though they go kerflooey. It is easy to get that assurance.

Facebook is a fairly flexible stock, so that investors can safely raise the share price to a certain degree. The Balance does not have and guidance on taxation, savings or financial services.

Facebook earned about 90 percent of its advertisement revenue in compliance with the financial statements of the company. Advertising is so good for FB so far, but a business that relies on one source of revenue is no different than an investor that relies on a strong protection.

Factors:

Security Concern: Notable concerns include the use of a common "Like" button on third-party websites monitoring users, likelihood of infinite user information recordings, automated facial recognition software and its workplace function, including disclosure of employer-employee accounts. These may cause the reason for lowering down the active user and hence less revenue. Government intervention also come in such a way.

Alternative: Although Facebook is currently having the monopolistic power but still in the age of digital era anything can be possible, like when there was Orcut once upon a time everyone was investing on that only. But then later Facebook came with a bang. Like this if any competitor comes in future then the investment will be at stake. It is a anyday possible in ever-changing world.

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