Facebook Inc: This Could Be a Big Problem for FB Stock
Will Fake News, Faulty Metrics, and Slow Growth Dramatically Hurt FB Stock?
Facebook Inc (NASDAQ:FB) stock has some analysts concerned over long-term projections due to several recent setbacks to the social media giant, including the platform’s problems with fake news, faulty advertising metrics, and potentially slow growth next year.
FB stock rose on Monday by 3.75%, but the climb belies the fact that most of the recent news regarding the tech company has been on the negative side.
First, there’s the concern over fake news, with some going as far as to declare that it was Facebook itself that helped swing the U.S. election for Donald Trump, due to its lack of provisions against fake news. (Source: “Donald Trump Won Because of Facebook,” New York, November 9, 2016.)
Whether this is truly the case depends on who you ask, but the one certainty is that the call for Facebook to exercise more control over the “news” that enters the feeds of its users is only getting louder. And much like Facebook’s perceived fault or innocence in influencing the election, analysts are split on whether the fake news debate will have an impact on FB stock.
Then you have the issue concerning the misrepresentation by Facebook of video view times. For two years, a miscalculation by Facebook had a 60%-80% discrepancy in how long viewers watched video content, a key metric used by advertisers.
Publicis Media sent a letter to clients, reviewed by The Wall Street Journal, writing that the metric issue “once again illuminates the absolute need to have 3rd party tagging and verification on Facebook’s platform. Two years of reporting inflated performance numbers is unacceptable.” (Source: “Facebook apologizes for exaggerating video view times,” MarketWatch, September 23, 2016.)
And then there was the announcement that ad revenue growth will come down “meaningfully” going forward, and it’s a perfect storm of trouble for FB stock, at least on the surface.
Of course, FB stock still remains one the strongest shares on the market, and most analysts don’t fear that the value will nosedive anytime soon, but there are a few more bears around a stock that is usually surrounded by bulls.