Facebook Inc (NASDAQ:FB) is a top tech stock but the reality is that it’s facing a lot of uncertainty, especially with a big U.S. election coming up this year.
Its business could face more scrutiny depending on who becomes elected president. It even faces the possibility of being broken up. Regardless of what happens, Facebook’s stock just isn’t as safe as it was before.
Given the poor job the company did in protecting user data, many of those risks are self-inflicted. The Cambridge Analytica scandal put users on alert as to just how vulnerable their information was on the social media site.
While Facebook’s stock has recovered from the scandal, there’s little reason for investors to believe that the company has changed its ways and that it won’t land into hot water again.
Last time, the Federal Trade Commission (FTC) fined the company $5 billion over its privacy violations — and a subsequent fine could be even greater.
Investing in this stock is a safer option
Cybersecurity and data privacy is growing in importance, and one company that investors will want to consider is BlackBerry Ltd (TSX:BB)(NYSE:BB). Unlike Facebook, the company’s reputation centres on safety and security.
That’s why over the long term, the stock may be a much better option for investors. The company still rebuilding its brand after it failed to compete in the cell phone market, and with a modest market cap of around $4.2 billion, it can get a lot bigger as it continues to grow and reach more customers.
One possibility is that a company like Facebook even considers buying out BlackBerry to help solidify its image, which would certainly be cheaper than incurring fines from the FTC.
While there’s no guarantee that that will happen, the cheaper BlackBerry becomes and the more of a priority cybersecurity becomes for top tech stocks, the more likely it is that a larger company starts to consider BlackBerry as a possible acquisition.
But even if a buyout doesn’t happen, BlackBerry is still growing its business. Licencing sales were up 13% in the company’s most recent quarterly results and its acquisition of Cylance is now part of its business, potentially driving further growth, as the two brands now have the potential to reach more customers by upselling each other’s services.
Artificial intelligence (AI) is still in its very early stages, but with BlackBerry already getting involved in AI through its acquisition of Cylance, it’s in a great position to develop stronger, more sophisticated enterprise tools for business that can advance cybersecurity and controls relating to data — and that can lead to much more growth down the road.
Facebook and BlackBerry have gone in opposite directions over the past year; shares of Facebook have risen more than 30% while BlackBerry’s have declined by a similar percentage.
But it wouldn’t be surprising for those positions to flip in the coming years, especially as companies and investors start taking data privacy and cybersecurity more seriously.
With a much lower valuation than Facebook and a lot of potential growth still to come, it’s hard not to like BlackBerry over the long term.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor David Jagielski owns shares of BlackBerry. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. David Gardner owns shares of Facebook. Tom Gardner owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool recommends BlackBerry and BlackBerry.