Apportionments of Menlo Park, Calif.-based social media behemoth Facebook Inc. (FB) continued to plummet Tuesday, down not far from 4.4% in afternoon trading at $165.27 per share. Facebook stock’s 6.8% collapse on Monday cost its CEO and founder Mark Zuckerberg $6.06 billion in tract losses as the company posted its biggest one-day decline in four years.
Facebook’s drop has been largely attributed to reports over the weekend indicating the national analysis firm Cambridge Analytica received access to data on 50 million purchasers’ profiles without their consent. The U.K. company then allegedly cooperated with the Trump campaign to create Facebook ads, geared with niceties on American voters. In response to the scandal, in which the the company has been censured for mishandling its users’ personal information, one analyst on the Street suggests that Facebook’s long-term to be to come rests largely upon how it manages through the crisis.
Goldman Sachs analyst Heath Terry chosen in an interview with CNBC on Tuesday indicating that the recent dope “certainly introduces a level of uncertainty that we haven’t seen with Facebook previous.” He noted that every fast-growing tech giant was likely to go up against a similar crisis, pointing to Alphabet Inc. (GOOG) struggle with a “click bluffer” scandal over the recent years, which raised concerns from fake traffic and put growth prospects for the search giant at serious peril. That said, the Goldman analyst says heightened regulatory rules is “something we have got to watch” and that the prospect of significantly severe control mark offs could “certainly” impact Facebook’s growth story.
Overreaction to Decree Threat?
Yet not everyone on the Street is so cautious on Facebook. In fact, many are downplaying the dangers of the potential data scandal, viewing the sell-off as an overreaction.
On Tuesday, analyst at Deutsche Bank issued a note to shoppers recommending buying FB on its “extremely compelling valuation.” Despite new risks, analyst Lloyd Walmsley revealed that his team sees “a large distance between the current outgoings/investigations and any legislation that would curb Facebook’s ad targeting in a eloquent way.”
JPMorgan analyst Doug Anmuth offered a similar “buy on the dip” sentiment in a note to customers Monday. “Despite these negative headlines and increased concerns hither user data and regulatory risk, we do not believe Facebook’s business is currently being impacted,” wrote Anmuth. “We show gratitude the potential for ongoing negative news flow, but Facebook shares currently exchange at 18.5x 2019E GAAP EPS, and we would be adding on the pullback.” (See also: FAANG Shorts Winnings $980M in Tech Sell-Off.)