×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: facebook | zuckerberg | shares | stock | price

No Relief Yet for Facebook Shares After Zuckerberg Apology

No Relief Yet for Facebook Shares After Zuckerberg Apology
Bantuquka/Dreamstime

Thursday, 22 March 2018 08:19 AM EDT

Shares of Facebook Inc. fell 3 percent in premarket trading on Thursday as an apology from Chief Executive Mark Zuckerberg did little to quell Wall Street nerves about how much a row over user data privacy will cost the company.

Zuckerberg on Wednesday promised tougher steps to restrict developers’ access to user information, his first response to allegations that London-based political consultancy Cambridge Analytica improperly accessed data to build profiles on American voters and influence the 2016 presidential election.

Analysts from several brokerages expressed relief that there were no signs in Zuckerberg’s status update on the row or in subsequent interviews of a more fundamental shift in the company’s advertising-driven revenue model.

The price of Facebook shares, however, has fallen for two of the last three days, knocking nearly $46 billion off its market value, and some analysts said it was clear the company would have to carry extra costs to shore up its reputation in the months ahead.

Technology stocks have fallen along with Facebook this week as investors worried the row was likely to lead to much tighter scrutiny of global platforms like Google, Twitter and Snapchat.

“We expect more cautious FB investors to point to the potential for FB to spend more this year due to these increased safeguards...which will hold back earnings power,” Morgan Stanley’s Brian Nowak said in a morning note.

Stifel analyst Scott Devitt was the fourth major Wall Street name to cut his price target on Facebook, by $27 to $168, saying the uncertainty generated by the row demanded a higher discount.

“Facebook’s current plight reminds us of eBay in 2004 – an unstructured content business built on trust that lost that trust prior to implementing policies to add structure and process,” Devitt said.

“We would buy all of our Buy-rated stocks and many of our Hold-rated stocks before we would buy Facebook shares, given the information available to us,” Devitt added. He has a ‘Hold’ rating on Facebook.

AD DOLLARS

Amid the Facebook storm, U.S. President Donald Trump took to Twitter on Thursday morning to boast about his successful use of social media during his 2016 election campaign.

“Remember when they were saying, during the campaign, that Donald Trump is giving great speeches and drawing big crowds, but he is spending much less money and not using social media as well as Crooked Hillary’s large and highly sophisticated staff. Well, not saying that anymore!,” he tweeted.

Steve Bannon, who ran Trump’s 2016 campaign before falling out with the president last year, speaks at a Financial Times event on the “Future of News: Trust, Technology and Transformation in an Age of Upheaval” later on Thursday.

Zuckerberg said the social network would investigate thousands of apps that have used Facebook’s platform, restrict developer access to data, and give members a tool that lets them disable access to their Facebook data more easily.

Those plans did not represent a big reduction of advertisers’ ability to use Facebook data - the company’s lifeblood.

Open-source browser and app developer Mozilla said late on Wednesday it was suspending advertising on Facebook.

“We found that its current default settings leave access open to a lot of data – particularly with respect to settings for third party apps,” Mozilla said in a blog post. It would consider returning if Facebook strengthens its default privacy settings for third party apps.

The Times newspaper reported that British advertising group ISBA, which represents thousands of well-known brands, had threatened to withdraw ads if investigations show user data has been misused.

“We think this issue is more likely to snowball than recede and that advertisers are reaching a tipping point at which spending on not only Facebook and other online platforms, is re-evaluated,” brokerage Liberum said in a note. “The big beneficiary from any shift would be the TV Broadcasters.”

© 2024 Thomson/Reuters. All rights reserved.


InvestingAnalysis
Shares of Facebook Inc. fell 1.5 percent in premarket trading on Thursday as an apology from Chief Executive Mark Zuckerberg failed to quell Wall Street nerves about the company's handling of a row over user privacy.
facebook, zuckerberg, shares, stock, price
636
2018-19-22
Thursday, 22 March 2018 08:19 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved