Stocks

Facebook Stock Bottoms Below $150 After New Data Concerns

facebook stock
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The bad times just keep rolling for Facebook Inc (NASDAQ:FB). Regulators have officially confirmed that they’re investigating the company’s data practices amid the Cambridge Analytica breach. It seems like the probe is coming just in time, as we are also hearing that Facebook may have been scraping vast amounts of data from Android users. Facebook stock tanked another 5% right out of the gate on Monday, but analysts continue to advise investors to buy it on the pullback.

New data allegations against Facebook

Ars Technica reported over the weekend that Facebook seems to have been scraping large amounts of call and text data from Android users for years. The tech site states that upon reviewing archives of the data Facebook pulled from them, multiple users have found call-log data from their Android devices dating back to at least 2015. Users’ archives also include metadata from text messages sent and received on their Android devices and information on their contacts.

Facebook vehemently denies that it has been wrongfully collecting data from users. The social media firm claims that it received permission from users to collect their call and text history, despite the fact that so many users seem surprised that this is happening. The company describes this data collection as an “opt-in” feature.

It’s easy to see why Facebook can say that it receives permission to collect this data, and it all goes back to the issue of app permissions. There has been concern in the past about what types of information apps are given permission to access, and it’s starting to sound like Facebook’s app could be just as guilty as numerous other apps when it comes to asking for access to data it doesn’t really need. The issue calls to mind Sarahah, another social media app that became hugely popular last year and was blasted for doing the same thing Facebook seems to have been doing. It also highlights just how important it is to thoroughly read everything apps are asking you when installing them.

Facebook stock pummeled by bad news

Facebook stock plunged to its lowest level in more than eight months on Monday morning after falling more than 10% last week. FB tumbled as low as $149.02 per share, effectively confirming the worst-case scenario set out by GBH Insights analyst Daniel Ives. In a note this week, he set two target ranges for Facebook stock in the wake of these ongoing data problems. He remains convinced that Facebook stock will recover, describing the data problems as offering “a golden buying opportunity” to own the social media firm. In fact, he sees fair value for Facebook stock in the $210 to $240 range in the most bullish scenario.

However, he also said that the Cambridge Analytica breach could be “a seminal negative moment that will change the future business model and growth trajectory” of the company. In this event, he saw a fair value for Facebook stock in the $150 to $170 per share range, which means the shares have bottomed out at the lowest end of his most bearish range.

Facebook stock price target cut

As it becomes clearer that the data concerns aren’t going away any time soon, a few analysts have begun to slash their price targets for FB stock. Although Ives is holding steady at $225 per share with a Highly Attractive rating, Baird analyst Colin Sebastian trimmed his price target from $225 to $210 per share, although he maintained his Outperform rating on it. He revealed the results of his firm’s recent survey on social media usage, which indicate that usage numbers seem to have skidded even further after the daily user decline observed in the fourth quarter.

He also warned that some brand and small- to medium-sized businesses may decrease their spending on the social media platform temporarily in response to the negative headlines. However, he feels that it won’t go on very long because he doesn’t think there are very many other options for digital advertising that present the same opportunities as Facebook. He’s not concerned about “platform irrelevance,” despite all the data concerns, and he predicts that Facebook stock is close to bottoming out.