Illustration by Joel Arbaje; Source photograph by Michael Schaffler
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commitment to creating a private messaging platform has the reluctant blessing of one analyst, but another is concerned about the last critic of the social networking giant in Congress.
Rob Sanderson of MKM Partners sees Facebook's decision to emphasize security and gradually embrace cryptography as an inevitable step in the midst of the increased consumer data debate. "It shouldn't come as a surprise to investors," he wrote in a research note last Tuesday.
But the move comes with potential consequences, writes Sanderson, who maintains a Buy rating on Facebook shares (ticker: FB) and a price target of $ 190 per share.
"Turning to full cryptography, FB is technologically guaranteeing privacy protection for all users, including those who want to damage and exploit others," writes Sanderson. "This has the potential to become increasingly controversial over time."
He is also concerned about the impact of the privacy change on data collection from 2.32 billion active monthly users of Facebook. "The management believes they will still have much more data collection opportunities than most companies, but they will be less numerous than those available," he says.
Stifel analyst Scott Devitt, meanwhile, is concerned about an article in the New York Times by David Cicilline (D., R.I.), a member of the subcommittee of the Antitrust Chamber, commercial and administrative law. In the article, Cicilline takes the step on a series of missteps that he says calls into question if Facebook's conduct has "violated antitrust laws". The Federal Trade Commission iIt is expected to hit the company with a multi-billion dollar fine, according to a report by the Washington Post.
Cicilline also suggests that Facebook's plan to create messaging interoperability between Facebook Messenger, Instagram and WhatsApp could "promote its monopoly power. This comment has Devitt's attention.
"During our mandate to monitor the Internet industry, the ability to ignore regulatory risk and political noise has always led to better stock returns," Devitt wrote in a statement Tuesday. "These more recent problems could also be transitory and FB's actions could prove to be economic compared to its earning capacity, but something seems very different to us this time and today. [Tuesday’s] The NYT article is a further proof that this could be more than a passing fad. "
Devitt reiterated a Hold rating on Facebook shares and a price target of $ 155.
Facebook shares gained 0.8% at $ 163 at 12:03 pm Wednesday, also as the
S & P 500
fell 0.5% to 2818.07, the
decreased by 0.4% to 7690.18, and the
Dow Jones Industrial Average
lost 149.34 points, or 0.6% to 25.738.04. The stock has increased by 24% this year.
This post has been updated to include wider market movements.
Write to Jon Swartz on firstname.lastname@example.org