Aegis Capital's Anthony Says Facebook Has A Credibility Problem

Social media giant Facebook, Inc. FB had a rough 2018, with the Cambridge Analytica scandal dominating headlines in the first half of the year and now reports that management allowed outside companies access to read users' messages.

What Happened

Facebook's multiple privacy-related scandals resulted in both investors and users concluding that the company has a "credibility problem," Aegis Capital's Victor Anthony told CNBC in an interview. The analyst said he shares this view, as advertisers are now questioning if Facebook is the best place to spend their dollars.

While advertisers are sticking with Facebook for now, they will certainly start "looking elsewhere" if more scandals come in the coming months, he said. CEO Mark Zuckerberg needs to "get his finger on the pulse a little bit" to restore confidence in the platform, the analyst said.

Why It's Important

Facebook's entire business model is under threat and the company needs to make "radical changes," especially at the management and even board level, Anthony said. It's "surprising" that none of these changes have been made, he said — but investors hoping for Zuckerberg's exit will be disappointed, as he controls the majority of voting shares, the analyst said. 

What's Next

Facebook remains an incredibly strong platform highlighted by a user base in the billions and a video platform that could potentially one day rival YouTube, Anthony said. The company's Instagram platform continues to impress in terms of monetization, while WhatsApp and Messenger are "on the cusp" of monetization, he said. For these reasons, the analyst said he's "sticking with the stock" and continues to hold a bullish stance on Facebook. 

Related Links:

Despite Privacy Missteps, Analysts Still Like Facebook

Munster: There's Something 'Fundamentally Wrong' With Facebook