By Michael Teich
Facebook may have impressed Wall Street with strong advertising revenue and user growth, but the social media company has not yet escaped from the Cambridge Analytica data privacy scandal unscathed, said Scott Devitt, an analyst at Stifel.
Shares of Facebook surged Thursday, a day after the company reported first-quarter advertising revenue grew 50 percent compared with a year ago. The news eased investors’ fears that advertisers would flee the platform after a backlash from users ー and Congress ー about the security of their personal information.
In its earnings call on Wednesday, the company also addressed Europe's new General Data Protection Regulation, warning the new privacy requirements could flatten or reduce the number of active users in Europe when they go into effect May 25.
Devitt said in an interview with Cheddar that he doesn’t see this being a major burden for Facebook, adding that the new rules may only have a minor effect on the number of users abroad.
“The bigger question is fatigue with the platform,” said Devitt, who has a “hold” rating and $175 price target on Facebook stock.
Facebook saw its first-ever decline in users in the U.S. and Canada in the last quarter of 2017, but it got back on track in the first quarter of this year ー it reported 185 million users, up from 184 million last year. Devitt said the revival is a promising sign.
For the full interview, click here.