TradingWithCody Chief Guide Elad Ryba on why Facebook will dominate and Twitter will just do ok

Social media is the future. No doubt about that. People have loved to communicate for as long as man has been on this planet. Telephone lines into homes were a revolution, everyone wanted to talk to one another from a distance. The stock of RCA radio went from 50 to 400 just so they can hear others. People love communicating with others. Cellphones were all the rage – even the initial large brick versions. Then came the Motorola star tack which was a wonderful hit. A small flip phone you can put in your pocket was an overnight sensation. Then came the Smartphone and the world was about to enter into a new era. Data usage skyrocketed and continues to do so. It’s one thing to talk to another person on a voice call, to hear their words, sounds of their voice, happiness, excitement, joy, sadness all the human reach out and touch someone joys without visually seeing them. Texting was the next big thing as we could send our words to others in seconds via text when we are free and don’t need the other person to be free to talk for minutes at a time. Attach smiley or sad face to give the words an extra layer of emotion that can’t be done with text and only by voice. Now we have face time and we can chat with others when both make time to have a conversation anywhere around the world.

Twitter is a nice medium in its current form to send out one’s opinion for those who care to listen. It’s good for communicating with friends in a simple plain vanilla layer comprised of 140 characters or less. Twitter lets anyone in the world follow you, basically bringing billions of people to your front door via unedited, unselected, non-chosen, solicitations. While that sounds great I think therein lie’s one of the main problems. Who wants to spend countless hours, days or months deleting / blocking users from following you? It’s an uphill climb that can’t be won. It’s just text, limited text; it’s not a rich context platform. The people reading you are not always friends or friendly and there is certainly no accountability. Anyone can say what they want to you when they want, without repercussions.

Facebook has a much better model in my opinion. First of all it offers the same billions of user’s access to your front door. However, here you decide who you let in, on an individual basis. You decide what type of environment / home you want to create in the news feed to make it richer, smarter, funnier and more valuable as you return to it numerous times a day. You want to make it so you return to it hourly, daily, and weekly to share with people you enjoy rapport with: family, friends, and coworkers from around the globe as you grow more and more connected in real time. People who you let in are accountable for what they say as you and some mutual friends see your virtual personalities at work. You can exchange more than 140 characters. You can exchange multiple rich pictures. You can upload amazing videos. You can have rich media conversations with images even when friends and family aren’t available for immediate contact throughout the day. Anyone can respond at their own pace and still have an interesting exchange of ideas, thoughts and emotions at the end of the day.

For anyone who listened to the most recent conference call it was quite eye opening. Most advertisers saw a 10X return on their ad budget. Facebook stock surged to 29.25 after it beat its most recent earnings. However, it has lost favor with investors for many reasons, good and bad.

Many say we need the teenagers to make Facebook hot or exciting to use. Well, last I looked teenagers don’t have a ton of disposable income. They aren’t the only ones who like to keep in touch using this rich media platform. Tweens, teens and young adults are growing up with FB and will only continue to do so.

In the past I thought I’ve never bought anything on Facebook and why would others, so I didn’t own a sizeable amount of Facebook stock. Well, then I realized when I choose to like a company, product or service and they advertise with Facebook, they send me information about that company, product or service. I then can choose to buy into promotions, discounts and the like from those liked companies.

My first interaction of such was with Budweiser. There was a promo on Facebook to be the first 1,000 people to like them and you would receive a $25 gift card from American Express. I liked them and in a week or so I received a gift card to use anywhere American Express was accepted.

My second use was on this past Valentine’s Day. Starbucks had a promo to send a $5 dollar virtual coupon to anyone’s cellphone to use at participating stores. I sent one to my wife and she was in an area with a Starbucks. It was a wonderful gesture she told me, very unexpected, romantic and super tasty. An “on the go” gift sent to someone’s cellphone being a total surprise can be a very worthwhile purchase.

Soon after that, Amazon had a promo through Facebook as I had liked Amazon on Facebook earlier.  The offer was for a Dyson Vacuum, 50% off retail. Since we needed a new vacuum, 50% off and a good brand were exactly what we were looking for. Free 2^nd day air shipping for Amazon prime members as well.

It was then that I realized how viable Facebook had become. To further bolster my feelings I watched A 60 Minutes segment on CBS a couple weeks ago that gave me my final push I needed to really believe in Facebook’s future. Facial recognition in the retail world is right around the corner. Companies are signing up with Facebook to access their data. A small camera is attached to the front of an establishment and a super-fast facial recognition process begins. If you are a Facebook user and have liked certain products (Coke, Pepsi, beer brand, clothing retailer, clothing name etc.) you will get a promo sent to your phone in mere seconds through text, e-mail, or Facebook alert on your app. An example would be if a camera were on a restaurant door or the front of its building and you walked by, you would get an alert, “Stop in for lunch at <restaurant name> and have a free beverage on us with your lunch order”. The restaurant knows you from Facebook’s data base and that you had liked the brand Coca Cola, Pepsi, beer or other. More and more retailers will have access to the Facebook data and any images you uploaded; profile pics, family photos and any pictures you were tagged in as well. You are then quickly detected through the facial recognition software and a match is made recognizing you. So many CEO’s have spoken that the 1^st media site they want to advertise with is Facebook. The social chatter helps them stay connected with customers and potential customers. It helps brands stay in touch in real time with what’s going on and where to ship product based on social chatter (See

).

I think the 3 recent Facebook upgrades on Thursday, from Jeffries, BMO capital and S&P with $32 to $33 price targets and more positive media attention that should be forth coming is reason enough to make Facebook a viable asset to your portfolio. Trading at around 24, I believe it will be a rewarding investment over time from these levels. East coast Wall Street older investors and management did not understand Tesla, whose stock fell from 38 to 25 and has now risen from 25 to 110. They did not understand First Solar when it fell from 50 to12 and now has risen from 12 to 55 with a recent upgrade at 52 from Goldman Sachs. They do not understand the power of Facebook as it has dropped from 29 to 23 after its recent quarterly earnings.

There is a dramatic revolution going on. People want cool affordable electric cars that emit no pollution and don’t look like a green ameba driving down the street. People want to have solar panel energy. They want their energy providers to be green and build solar farms. People want to use Facebook to connect with friends, family, products and services they like, use and enjoy.

These are the reasons why I believe in Cody’s evaluation of Facebook and that it will be one of the best performing social media stocks on the market. 1.2 Billion people like it as well and so should you.