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The case for Facebook: Is Wall Street overreacting to data scandal?

Facebook users may or may not delete their accounts because of the data scandal. But investors are rapidly deleting F...

Posted: Mar 21, 2018 5:43 PM
Updated: Mar 21, 2018 5:43 PM

Facebook users may or may not delete their accounts because of the data scandal. But investors are rapidly deleting Facebook from their portfolios.

Shares of Facebook fell another 1% early Wednesday morning before moving higher. The company has lost 8% of its market value this week, or nearly $35 billion.

Investors seem particularly alarmed by the radio silence from CEO Mark Zuckerberg since the revelation that Cambridge Analytica, a political consulting firm, improperly accessed the personal data of 50 million Facebook users.

But is Wall Street overreacting?

Some analysts think the crisis will blow over: Users won't defect in large numbers from Facebook and the other social media platforms it owns, including Instagram and WhatsApp. And advertisers will keep spending heavily on Facebook.

That's what Facebook hopes. But it may take a while before the storm clouds pass.

Brent Thill, an analyst at Jefferies, wrote in a report Tuesday that he thinks Facebook shares could be under pressure until at least the second half of this year.

However, Thill does not think that the Cambridge Analytica data problems will hurt the company's revenue, even though it has damaged Facebook's reputation.

Related: Why nobody can tell Mark Zuckerberg what to do

Thill said that in the worst scenario, Facebook stock could fall another $15 or so, to about $150.

But he believes the upside is much greater. Thill thinks the stock can hit $230 in the next 12 months, an increase of 40% from the current price and nearly 20% higher than the all-time high Facebook shares hit just last month.

"Cambridge is a bad actor in the space and an anomaly rather than the norm," Thill wrote. He added that subsequent changes made by Facebook should prevent similar compromises of user data to happen in the future.

Cambridge Analytica says it deleted the data when Facebook asked it to, and it did not use the data as part of its services to Donald Trump's 2016 presidential campaign.

Several other analysts remain Facebook bulls, too.

Eric Sheridan at UBS said in a report Tuesday that he sees no reason that marketers will suddenly stop spending on Facebook.

Few media outlets - and that's what Facebook is - offer big brand name companies the scope that Facebook does.

"We see current positive ad trends as running counter to investor fears," Sheridan wrote, adding that he was leaving his price target for Facebook unchanged at $214.

And Daniel Ives at GBH Research wrote in a report Tuesday that "we continue to strongly believe this situation if handled well by Zuckerberg & Co. will end up being a 'manageable risk' with more noise than actual financial ramifications."

Related: Data scientist says Facebook is making him a scapegoat

Ives kept his Facebook price target at $225, but he conceded that legal hearings in the United States and EU may hurt the company if Facebook doesn't take further steps soon to assure users that it is on top of the problem.

"If this data leak fiasco is left to fester it could take on a life of its own leading to tougher regulatory oversight/chatter down the road," Ives wrote.

Of course, the big wild card is trust.

If Facebook has truly lost the trust of users and people stop posting incessant updates about their kids, what they had for breakfast and their latest thoughts (pro and con) about President Trump, then advertisers may eventually lose faith in Facebook, too.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 658043

Reported Deaths: 12467
CountyCasesDeaths
Marion902221628
Lake48163871
Allen35614632
Hamilton31884394
St. Joseph29615510
Elkhart25291412
Vanderburgh21148377
Tippecanoe19815197
Johnson16262353
Porter15867268
Hendricks15744297
Clark11860179
Madison11688315
Vigo11520228
Monroe10267158
Delaware9800178
LaPorte9725194
Howard9024194
Kosciusko8519107
Bartholomew7394147
Warrick7380147
Hancock7379128
Floyd7149165
Wayne6597189
Grant6406157
Morgan6044124
Boone604188
Dubois5876111
Dearborn541266
Henry539892
Marshall5397104
Cass538999
Noble507575
Jackson462663
Shelby458890
Lawrence4161111
Gibson400581
Harrison395960
Clinton393353
DeKalb382878
Montgomery382883
Miami355163
Knox354484
Whitley347235
Huntington339276
Steuben336355
Wabash329575
Putnam326559
Ripley325261
Adams320749
Jasper313643
White295651
Jefferson293270
Daviess284496
Fayette270555
Decatur269688
Greene260278
Posey260031
Wells256074
Scott248947
LaGrange240270
Clay239444
Randolph225076
Spencer216130
Jennings214044
Washington208727
Sullivan202239
Fountain200641
Starke186450
Owen181652
Fulton177437
Jay177328
Carroll175718
Perry172635
Orange170450
Rush164222
Vermillion159040
Franklin158435
Tipton145641
Parke138415
Pike127232
Blackford120327
Pulaski106243
Newton96431
Brown94839
Benton91213
Crawford90113
Martin80014
Switzerland7527
Warren74712
Union66810
Ohio52811
Unassigned0428

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 959995

Reported Deaths: 17045
CountyCasesDeaths
Franklin1111071193
Cuyahoga945941709
Hamilton72643947
Montgomery46983875
Summit39720942
Butler35094460
Lucas34829757
Stark29061835
Warren22166270
Lorain21781386
Mahoning19282537
Lake18210300
Clermont18200206
Delaware16289129
Licking14832197
Fairfield14401156
Trumbull14171455
Greene13481211
Medina13220219
Clark12139333
Wood11411193
Portage10870153
Allen10715232
Richland10184205
Miami9954179
Columbiana8052179
Muskingum8046123
Tuscarawas7984235
Pickaway796798
Marion7944135
Wayne7799217
Erie6803183
Ross6083136
Geauga5996129
Hancock5945110
Scioto5886105
Ashtabula5884143
Lawrence520373
Union506552
Darke5013122
Belmont483987
Sandusky473393
Jefferson4726107
Huron4722117
Seneca4624103
Athens457331
Mercer4570101
Auglaize454498
Washington452186
Shelby439167
Knox398584
Putnam3967101
Madison389147
Ashland375495
Fulton375364
Defiance3682102
Brown367842
Crawford355396
Preble351070
Logan350158
Clinton336862
Highland324455
Ottawa319667
Williams299777
Jackson287756
Guernsey284034
Champaign283145
Fayette266343
Perry265943
Morrow257224
Henry243665
Holmes2420104
Hardin241957
Coshocton230847
Van Wert227849
Gallia219846
Adams213732
Pike212825
Wyandot207952
Hocking192248
Carroll178928
Paulding158023
Meigs133836
Noble128142
Monroe115336
Morgan99734
Harrison99632
Vinton76515
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