Displaying items by tag: facebook

(San Francisco)

Remember all those privacy policy email updates you got over the last few weeks? Well in case you were not paying attention, they arrived because of a landmark change in the way the EU is governing data, and even US companies needed to comply if they had any European customers. Well, under the new rules, Google is already seen as the big winner, which we thought investors might like to know. Google has been able to get data use consent from users much more successfully than others, and in turn, it has been routing many of its ad customers to its own ad exchanges instead of those of vendors.

FINSUM: As was always going to be the case, it looks like the big tech powers will be able to use the new data regulations to their advantage. Theoretically this could be a boost to Google’s cash cow Adsense business.

(Washington)

One of the elements that has been weighing on technology companies this spring has been the threat of regulations. To judge that risk, Barron’s interviewed a number of Wall Street Analysts to get their views. Overall, the consensus was that future regulatory risk for fangs was muted. One managing director for Canacord Genuity commented that, “Facebook management addressed important data and privacy issues head-on, outlining new disclosure standards for political ads and hiring aggressively against privacy initiatives.…For the time being, the worst is very likely behind Facebook stock.”

FINSUM: We tend to agree here. We do not see the government taking major action, and the worst seems to be behind tech companies, for now.

(San Francisco)

For all the worries about tech companies and the threat of regulations, one of the best supporting points for the stocks was the strength of their underlying businesses. Despite suffering some losses in share price over the last couple of months, Facebook showed yesterday why the FANGS still look like a good buy. Net income in the first quarter was up 63% versus last year to $5 bn. Earnings per share was up 25% versus estimates. Revenue also jumped 49% versus last year.

FINSUM: Despite all the controversies, Facebook’s advertising business continues to rake in cash by the truckload.

(San Francisco)

Tech has been doing very poorly lately. Between the heat on Facebook and the growing threat of regulation to Amazon and other big tech companies, things look bleak. However, they may not be as bad as they seem. The reason why is two-fold. Firstly, many experts think any tech regulation won’t be hugely disruptive to the industry. Secondly, the underlying businesses look strong and the worries about regulation have not really dented earnings expectations. All of this leads many to believe that the whole selloff is overdone and things will blow over.

FINSUM: We can’t see any major tech regulations coming out that would really dent the industry, so all else equal, we do think the selloff might be overdone.

(San Francisco)

Facebook has been going through a lot of turmoil lately. CEO Mark Zuckerberg is under fire, and the company is currently embattled over data leaks, especially related the Cambridge Analytica debacle. A majority of Facebook users now say they don’t trust Facebook with their data. Because of all this turmoil, however, Facebook’s shares now look like a bargain, says Barron’s. Three year ago the company’s p/e ratio traded at a 140% premium to the S&P 500. Now it down to just 30%, even though its revenues are growing 5x as fast as the market and its profit margins are 3x average. Barron’s argues that if you view Facebook as a “sin stock”, more like a cigarette company than a tech titan, then its return profile could prove very strong.

FINSUM: A lot of sin stocks, such as tobacco companies, have done very well despite public scorn. We think this current bout of anger will likely blow over and the company will return to delivering excellent earnings.