Facebook, Inc. FB's ongoing privacy saga has resulted in multiple high-profile companies suspending ties with the social media platform. Investors should expect the "storm to linger" in the near-term, but ultimately it "should pass," according to Aegis Capital.
The Analyst
Aegis Capital's Victor Anthony maintains a Buy rating on Facebook's stock with a price target lowered from $220 to $215.
The Thesis
The average Facebook user is paying "little attention" to the ongoing data privacy fiasco, Anthony said in a Tuesday note.
Encouragingly, the analyst's conversations with both users and advertisers found "very few" people lost trust in the platform, and most users had zero intention of reducing their Facebook usage, he said.
Small- and medium-size businesses that advertise on Facebook are "watching how this crisis unfolds," but none are willing at this time to lower their spend on the social media platform, the analyst said. While SMB advertisers represent the majority of ad spend on the platform, large companies that advertise on Facebook made their intention to pull ads off the platform public, Anthony said.
Looking forward, Facebook will "be on the defensive and cautious" with any new ad product it launches and how it targets users, according to Aegis. As the privacy data fiasco persists, advertisers of all sizes could in theory scale back, and governments could introduce regulations that limit Facebook's ability to target users, Anthony said.
Facebook will ultimately "pull through this" — and the stock's decline represents a buying opportunity for investors, the analyst said.
Price Action
Shares of Facebook were trading lower by more than 3 percent Tuesday afternoon.
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