Facebook’s (FB) Data Scandal Will Leave It Unharmed

Facebook, Instagram users unfazed by the social giant's recent issues and negative news flow

Facebook FB Stock

It goes without saying that Facebook (NASDAQ:FB) has been under much scrutiny in 2018 for a litany of issues, including its approach to fake news, electoral interference, handling of user data in the Cambridge Analytica scandal and a broad backlash to smartphone addiction. Facebook’s users, however, don’t seem to care about the issues pertaining to these controversies. In fact, Piper Jaffray‘s Michael Olson tells investors that his firm’s survey of about 1,300 FB and Instagram users found that the majority, or 67% of respondents are using the social networking services the same or more versus last year.

What’s more, Olson says that the remaining 33% is actually lower, as it’s a self-reported figure. And it makes sense. As the analyst explains, when it comes to surveys the concordance between measured and self-reported categories is definitely not excellent. Particularly, in Facebook’s case, as people – obviously, for many reasons – have a tendency to “under report” how often they log onto social media.

“While this raises questions around user growth rates and expenses necessary to improve security and screening, our survey of Facebook and Instagram users leaves us confident that most are unfazed by the negative news flow,” Olson said in a note to clients Wednesday.

Basing his opinion on the results of the survey, the analyst concludes that the recent sell-off in FB shares “more than reflects” issues surrounding Europe’s new privacy laws as well as increasing costs of content security and screening.

Facebook’s user base is well past 2 billion monthly active users.

Olson reiterated his ‘Overweight’ rating on the Facebook stock with a $200 price target.

In other FB news – Dan Rose, a top executive who oversaw the company’s business development team, announced that he is leaving the company.

Rose joined Facebook in 2006.

His departure marks another key exit for the social media giant — following the departures of Chief Security Officer Alex Stamos and head legal counsel Colin Stretch.

Facebook Stock Action

Facebook hit an all-time high of $218.62 a share on July 25. With Wednesday’s 0.59% gain, the 20.4% pullback in FB shares since hitting a record high, puts the name 2.40% lower year-to-date.

Facebook shares are up 3% year-over-year through Wednesday versus the S&P 500’s 17.4% return.

Of the 30 brokerages covering the stock, 26 have ‘Strong Buy’ ratings, 3 have ‘Strong’ ratings and one has a ‘Hold’ rating. No brokerage rates the name ‘Underperform’ or ‘Sell’.

Facebook’s market value exceeds $500 billion, and its shares closed Wednesday up $1.02 at $173.64.

As of writing, FB is changing hands at $174.50 in Thursday’s market trading.

Reference: CNBC, Nasdaq

About Ari Haruni 95 Articles
Ari Haruni is the Co-Founder & CEO of Wall Street Pit.

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