The probe into Big Tech continues.
Last week, investigators from the House Judiciary Committee wrote a letter to Facebook (FB), Alphabet's Google (GOOG), Apple (AAPL) and Amazon (AMZN), asking for documents for its “top-to-bottom” investigation. Members of the committee believe these documents will help provide information on whether these companies’ practices are harming customers or violating antitrust law.
Facebook stock didn't even flinch, and analysts still see the social giant as a very compelling investing opportunity. Out of 34 analysts polled in the last 3 months, 30 are bullish on Facebook stock while only 4 remain sidelined. With a return potential of nearly 25%, the stock’s consensus target price stands at $236.68. (See FB's price targets and analyst ratings on TipRanks)
On Facebook, the committee is focusing on its acquisitions of Whatsapp and Instagram, including acquisition-related internal communication, as well as financial documents on Facebook and its products. As the House also wants to look at Facebook Payments, Evercore analyst Kevin Rippey says this “suggests regulators are focused on Libra, and potentially getting ahead of an expansion of FB’s payments initiatives.”
Rippey believes investors should “keep an eye on” the investigation into Onavo data, a web analytics company Facebook acquired in 2013. The analyst thinks data from the app “gave FB huge swaths of intelligence regarding user’s mobile behavior, including engagement on competitors’ apps,” and has allegedly provided the company “an edge in responding to fast growing rivals with similar look-a-like products.” Rippey says "Onavo could come under scrutiny, as regulators were likely unaware of how Onavo data could be utilized by FB.”
With the stock off 45% year-to-date, Rippey reiterates an Outperform rating on Facebook stock, with $230 price target, which implies nearly 21% upside from current levels. (To watch Rippey's track record, click here)
With the House investigating Facebook for possible antitrust violations, as well as increased privacy regulation on Big Tech, Facebook actually recently made headlines for making it easier for its users to protect their data. The new “Off-Facebook Activity” tool was recently released in Ireland, Spain and South Korea, and allows users to disconnect Facebook’s tracking of users on non-Facebook sites. But while it is a step in the right direction, users must manually turn on the tool, which will discourage many from using the tool.
All in all, Facebook is battling regulators on multiple fronts, including antitrust and privacy, and Big Tech is routinely and increasing receiving negative attention from presidential candidates in the Democratic party. But Facebook stock continues to be one of Wall Street's favorites, and is up nearly 40% for the year.
Granted, not everyone is enthusiastic about Facebook stock. TipRanks shows that individual investors have been, on net, pulling back from Facebook shares over the last 30 days.