How Will Top Exec Exits Impact Facebook (FB) Stock?
Change is coming at Facebook (FB).
The social network giant has lost its top executives, as announced last week by CEO Mark Zuckerberg. Chris Cox and Chris Daniels — its chief product officer and top Whatsapp executive, respectively — are leaving Facebook in a time when the company is undergoing massive change. This just adds to a tumultuous year for the company, which includes a Congressional investigation, millions of dollars in fines by the EU and the departure of Whatsapp co-founder Jan Koum.
Even with the changes, Oppenheimer's analyst Jason Helfstein maintains his outperform rating on the stock, with a $195 price target.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Helfstein has a yearly average return of 18.3% and a 65% success rate. Helfstein has an average return of 72% when recommending Facebook and is ranked #52 out of 5,256 analysts.
Helfstein says he is “updating [his view] on FB in the wake of recent employee departures, product announcements and regulatory risk.” The analyst views that “WhatsApp and IG founders departing relate to those products being integrated into FB,” as opposed to operating separately. Helfstein believes “Cox’s departure confirms Zuckerberg is likely to purse a more aggressive product refresh,” which “appears” to be an emulation of WeChat's ecosystem.
Aside from two key departures, Helfstein points to the California Consumer Privacy Act of 2018 (CCPA), which “guarantees strong privacy protection” as a growing threat to the company and its rivals. The analyst says “CA's definition of personal information stretches to include any information identifying a person, including anything linked or associated with their household,” which is broader than the EU’s GDPR.
Helfstein views “FB’s announcement of the ‘Clear History’ tool as a way to get in front of potential US (CCPA) and international regulation of consumer internet data.” This new feature “will let users monitor and control information the social network has collected on users via third-party apps and websites,” and the analyst expects this to “have a 7-10% near-term impact on revenue, assuming 15% of users regularly adopt this feature.”
For one of Wall Street’s favorite stocks, there sure seems to be a lot of trouble surrounding Facebook. From the announcement of a privacy-first model, to new regulation, to executive departures, Facebook has a lot to juggle right now. Yet even so, TipRanks analysis of 40 analysts shows a consensus Strong Buy. 33 of those analysts rate the company a Buy, while five are Holding and only two Sell. The average price target among these analysts stand at $191.06 on the stock, which implies a 19% upside from current levels. (See FB's price targets and analyst ratings on TipRanks)
