Shark Tank's Kevin O'Leary: Facebook will survive because 'there's nowhere else to go'

  • Thanks to its more than 2.2 billion monthly active users and all of their data, Facebook is a priceless repository for companies looking to access new customers with specialized tools for targeted advertising.
  • At this point, it simply has no peer, Shark Tank star Kevin O'Leary emphasized.

Shark Tank star Kevin O'Leary thinks Facebook will weather its data scandal and come out more profitable.

"I bet in two months, after all this blows over, their cash flows will be up, not down, because there's nowhere else to go," the celebrity entrepreneur said on CNBC's "Closing Bell."

Thanks to the 2.2 billion people who use it, and the detailed data Facebook has about them, Facebook is vital for companies looking to access new customers with specialized tools for targeted advertising.

"Where can I as a business in America get access to 2 billion customers that I can focus on...have a dialogue with and create a bond with my customer?" O'Leary said. "There is no other place."

Even if the government steps in and enforces regulation on the platform, as both Zuckerberg and Sandberg have acknowledged is possible or likely, O'Leary thinks Facebook will survive, because it has no viable competition.

"If you tell me there's another Facebook around the corner that will be a more attractive platform, and that somehow has better tools, I'll change my investment thesis," he said.

O'Leary is far from the only one who thinks so. Much of Wall Street thinks the Facebook scandal is overblown.

Shares of Facebook have fallen more than 10% this week after reports emerged that political data analytics company Cambridge Analytica accessed the data of more than 50 million Facebook users without their permission. Facebook has known about the situation since 2015 but didn't publicly acknowledge it until The New York Times and the Guardian's Observer reported it on Saturday.

Following those reports, it took another few days for CEO Mark Zuckerberg and COO Sheryl Sandberg to speak publicly about the situation, prompting yet more criticism for their handling of the crisis.

Both have since made statements and public appearances to address the data leak. Most recently, Sandberg appeared on CNBC's "Closing Bell" to reiterate her commitment to protecting users.

"We know this is an issue of trust. We know this is a critical moment for our company, for the service we provide," Sandberg said. "We are going to do everything we can."