Stifel on Wednesday published a note demand it has lowered its rating for Facebook shares from “Buy” to “Hold,” saying political and regulatory blowback could restrict how the guests operates in the long term.
“Facebook’s management team has created too many adversaries — politicians/ regulators, tech bandmasters, consumers, and employees — to not experience long-term negative ramifications on its business,” the firm said in a note.
The lower rating leak out after a rough year in which Facebook has experienced numerous scandals, a 30-million user data breach, declining and barn growth in key markets, an executive exodus and its worst stock performance since going public in 2012.
Stifel also published the in results from an on-going survey of Facebook users.
The results showed 79 percent of those surveyed now credit Facebook’s impact on society is neutral or negative, compared to 73 percent in survey results published by the firm in January. The inquiry also found that 60 percent of respondents said they rarely or never used Facebook Summaries, Marketplace or video, which are some of the company’s key new products.
Stifel said there is no downside to holding Facebook pieces, but the firm no longer believes the company’s upside is what it once was.
“We believe Facebook will struggle to return to the company that it before you can say Jack Robinson was or that investors expected it to be in the long run,” the note reads. “We prefer Amazon, Alphabet, and Netflix, as U.S.-based mega outdoes with similar thematic trends and more stable operating environments.”