Facebook chart

Social media giant Facebook has, in recent weeks, been beleaguered with the privacy data issues scandal along with the alleged harvesting of data in association with Cambridge Analytica. In my view, this could have certainly been a watershed moment for the stock. To concur with this, the stock performed poorly, moving from $180 to $150 over the period.

Indeed, I still hold the view that there are more repercussions to be felt from this as consumers learn how their web data interests are tracked both from open and borderline, illicit means. However, Q1 earnings were eagerly anticipated, especially with further clues to the extent of the privacy data issues and, devoid of any moral implications, how this has affected earnings. Facebook produced a stellar set of figures with a huge beat: quarterly profits came in just shy of an astonishing $5 billion for the quarter with overall revenue of $11.4 billion.

With the stock 15% lower from its February high and now around 9% lower for 2018, this certainly makes the case for a perfect time for investors to enter long positions. But…as alluded to above, I hold the view that we still haven’t seen the full repercussions of this privacy data scandal episode.  Not only that, but further official legislation in the form of the EU’s GDPR – General Data Protection Regulation – comes into force at the end of May.  This requires consumers to give clear consent as to how their data is used. Importantly, this will likely have a huge impact on how Facebook targets individuals with ads. The regulation also comes with fines if companies are non-complainant (potentially 4% of global turnover or €20 million euros – whichever is greater).

Chief Trader,

Jordan Hiscott

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The above-mentioned market views and content reflect only the opinion of the author, not that of ayondo. This service is for informational purposes only and does not constitute advice or investment advice.

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