User activity on Facebook (FB) has held steady despite the data privacy scandal that has rocked the social media giant, two Wall Street analysts said Monday, one of whom included a price-target cut based on higher expenses.
X"We are increasing our operating growth expectation for 2018 to 50% given heightened investment in safety, but we are not lowering our top line," Jefferies analyst Brent Thill wrote in a research note to clients. "Our channel checks have not pointed to advertisers leaving Facebook in a meaningful way (outside of a temporary public relations move)."
Thill, however, cut his price target on Facebook to 215 from 230, but maintained a buy rating. One of the greatest near-term risks to the company's performance, Thill said, is the higher operating expenses due to improving security.
In another report Monday, KeyBanc Capital Markets analyst Andy Hargreaves said advertiser checks suggest no meaningful change in spending trends on the network. He adds there is virtually no hesitancy from advertisers to continue spending.
"Despite significant media coverage and investor concern, checks with ad agency executives suggest spending on Facebook remains strong," wrote Hargreaves. "Engagement will be the key going forward in our view, and we see limited signs of material impact to date."
Greatest Risk
The greatest risk to the network is the potential for a lasting decline in user engagement, Hargreaves wrote.
"However, we have seen little in advertiser checks or third-party data to suggest a meaningful and lasting impact to engagement trends so far. Additionally, the company has confirmed the 'Delete Facebook' movement hasn't had a material impact on users to date," he said. The anti-Facebook meme was started by a co-founder of WhatsApp.
Hargreaves has an overweight rating on the Facebook with a price target of 245.
Last week, the company disclosed that data on 87 million users could have been compromised as a result of the Cambridge Analytica data scandal. That's up from previous estimates of 50 million.
Stock Plunge
Facebook shares were up 1.7%. near 159.90 during morning trading on the stock market today. Its stock has plunged about 16% since March 16. That's when media reports revealed Cambridge Analytica wrongfully obtained personal information on millions of users without their knowledge.
While usage seems to be steady, there have been several high-profile instances of those that did delete their Facebook pages. One was electric-auto maker Tesla (TSLA), where Chief Executive Elon Musk chose to delete the pages of the car company. He also deleted the page of rocket-making unit, SpaceX. Collectively, the deleted pages of Tesla and SpaceX had about 2.6 million followers.
And despite positive assessments from Wall Street, shares are telling a different story as its stock has triggered multiple IBD sell signals.
Facebook Chief Executive Mark Zuckerberg will head to Capitol Hill for the first time this week to offer testimony about data privacy practices
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The post Facebook Gets Price-Target Cut As Risks To Stock Persist Over Data Scandal appeared first on Investor's Business Daily.
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