Baird: Will Data Scandal Impact Facebook Usage Metrics?

Depending on who you ask, Facebook, Inc. FB's data privacy fiasco may or may not spell the beginning of the end of the social media giant.

The Analyst

Baird Equity Research's Colin Sebastian maintains an Outperform rating on Facebook's stock with a price target lowered from $225 to $210.

The Thesis

Conversations with advertisers who use the social media platform makes one thing clear, Sebastian said in a Monday note: the Cambridge Analytica scandal has had "little impact" on ad revenue so far.

Even if small- and medium-sized businesses temporarily pause their spend on the social media platform, it will likely be "short-lived," as there are few alternatives that can match Facebook's returns, the analyst said. 

Baird's checks did find additional decline in usage and engagement since January. This was particularly true among younger users, and could imply Facebook may report "further moderation" in usage and engagement in its first-quarter print, Sebastian said. 

While Facebook's stock remains under pressure, Friday's closing price implies a calendar 2019 EPS of $8, below the consensus estimate of $8.78. The stock also implies a calendar 2019 EBITDA of $35.8 billion, short of the consensus estimate of $42.1 billion.

"We think this represents an overly bearish view of Facebook's margin profile, even with the prospect of accelerating growth in operating costs," Sebastian said. 

Price Action

Facebook shares were trading down 3.39 percent at $153.98 at the time of publication late Monday morning. 

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