The Zacks Analyst Blog Highlights: Facebook, Alphabet, Apple and Amazon

The Zacks Analyst Blog Highlights: Facebook, Alphabet, Apple and Amazon Read More...

For Immediate Release

Chicago, IL – July 5, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include:Facebook FB, Alphabet GOOGL, Apple AAPL and Amazon AMZN.

Here are highlights from Wednesday’s Analyst Blog:

Facebook (FB) Roundup: Analyst Opinion, Regulatory Matters, Libra & More

June has been an eventful month for Facebook, which announced its digital currency Libra with significant backlash from industry watchers. But the month wasn’t lacking in other regulatory news from across the world as well as a good dose of the usual chatter on privacy and fake news. At the end of it all, it was encouraging to note that analysts remain optimistic about the company.

Analysts Optimistic About Facebook

Analysts from Morgan Stanley and Deutsche Bank have said that people are overlooking a c couple of good revenue opportunities that could add significantly to the bottom line in the not-too-distant future.

Morgan Stanley analyst Brian Nowak thinks that the recent move to monetize the Explore feature on Instagram can generate a billion dollars by 2021. He maintains a price target of $210.

Explore is already used by half of Instagram’s billion+ users, where they look to engage with new people and pages in their line of interest. 20% of time spent on Instagram is currently spent on Explore, with a high intent to purchase. This group will now see ads as they click on a picture or video and start scrolling down through the feed. Ads will probably increase over time, but the company is clearly feeling its way for now.

Advertisers will buy their Explore slots on Facebook ads manager and API and opt in for the Explore placement. Later, it will become part of the default with an option to opt out.

Deutsche Bank analyst Lloyd Walmsley thinks that the Watch video platform will have more daily active users (DAUs) by year-end and be able to generate $5 billion in revenue by 2021. According to Facebook, more than 720 million people monthly and 140 million people daily are on the platform for at least a minute daily, with daily users spending more than 26 minutes on average every day.

He’s also optimistic about the Instagram checkout feature that he thinks will generate additional revenue in the holiday season. He raised the price target from $220 to $230.

EU Order to Remove Content Outside Borders

Advocate General Maciej Szpunar of the EU Court of Justice has said that since current EU law “does not regulate the territorial scope of an obligation to remove information disseminated via a social network platform, it does not preclude a host provider from being ordered to remove such information worldwide.” While the opinion is not legally binding, the EU court generally follows the advice of its advocates general in most cases.

The opinion was triggered by a case related to a defamatory comment about Austrian political leader Glawischnig-Piesczek beneath her photo. She took the matter to court, which ruled that Facebook must not only remove the offensive comment from pages visible in the country, but also from all pages visible to anyone the world over.

Brazil Court Lowers Penalty for Not Sharing WhatsApp Data

Facebook had appealed the decision of a lower court on the amount fined for not cooperating with law enforcement on a request to share WhatsApp data. The appeals court lowered the amount fined from 2.035 billion reals ($528 million) to 23 million reals ($6 million). Earlier, a Facebook executive had been jailed for more than 24 hours for the same offense. WhatsApp popularity has grown in in the country with 120 million people, or more than half its population now using the service.

So Much for the Political Ads Policy

The Dutch organization Bits of Freedom has said that it was easy to circumvent Facebook’s political ads controls and that it had in fact successfully influenced German voters using a Dutch Facebook account and Dutch bank account. Facebook’s statement defended itself thus: “Our systems would be more effective if regulation created common standards for verifying political actors.”

Unfazed by the ineffectiveness of its policies, Facebook determined that political advertisers in Ukraine and Canada were to be added to the list of people that have to first verify their identity and disclose who paid for ads. Facebook continues to use its utterly useless “combination of automated and human review” process.

More Chatter on Hate Speech

In a move that French authorities claim are a first, Facebook has said that it will provide identification data related to hate speech online when demanded by courts. “Hate speech is no longer considered part of freedom of speech, it’s now on the same level as terrorism,” says Sonia Cisse, a counsel at law firm Linklaters.

French government officials think that this is the result of months-long talks with Facebook executives including founder Zuckerberg. They now believe that this will help the law take its own course. Some analysts have voiced the concern that this move could take the pressure off Facebook with respect to its responsibilities as a steward of user information.

After mob violence hit Sri Lanka during the Easter weekend and some token retaliatory measures were taken by the attacked, Facebook decided to limit the number of forwards of a WhatsApp message to five. This is a measure to slow down the process of a message going viral with the ultimate goal of limiting related offline violence. In Myanmar, there were a lot of messages condemning the militant Rohingyas and calls for retaliation. Facebook stepped in with a similar measure that only served to help the militants.

Now the Fake News

The latest headache in the fake news genre is the spread of deepfakes, which are essentially videos altered using AI and other tools to deliberately create highly realistic fakes. Zuckerberg has said that deepfakes may require separate measures from the company. He is also considering outright ban of these clips, but some people are concerned that a very broad ban could impact satire, art and political dissent (Facebook already meddles with this).

Separately, the UK Competition and Markets Authority (CMA) has asked eBay and Facebook to clean their platforms of groups buying and selling fake reviews. Since UK citizens usually rely on reviews before making messages, the organization reached out to the technology companies. In eBay’s case, the CMA’s own experimenting revealed more than 100 listings with fake reviews, while on Facebook, there were 26 groups engaged in selling fake reviews. Facebook has since said that it has already removed 24 of these groups.

US Regulators Probing Facebook

Last week, President Trump went on Fox news to say that technology companies should be sued. However, he also blamed Europe and Margrethe Vestager for doing just that, saying that she hated the U.S. and had it in for American companies.

Earlier, the Justice Department and the International Trade Commission (ITC) split the responsibility of investigating Facebook, Alphabet, Apple and Amazon for violation of antitrust principles. So the ITC will be taking on Facebook (which it has been investigating for the past year since the Cambridge Analytica scandal) and Amazon, given the growing scale and expansion of its operations.

The FTC task force will also re-evaluate past government decisions that allowed a company like Facebook to acquire its future competitors like WhatsApp and Instagram.

The news sent the stock down and justifiably so given that it has already set aside $5 billion that it expects will be paid to regulators on privacy matters. To deal with privacy issues, the FTC is already looking to set up new positions at the company. Facebook has suggested that it will set up a privacy committee comprising board members and an external appointee by the FTC and headed by a chief compliance officer that could be Zuckerberg (thus defeating the purpose).

This is not a done deal yet because Facebook is still trying to come to a settlement. Humongous fines running to half its revenue, personal liability of Zuckerberg including his imprisonment (among other measures) would have been much better than an external appointee that could be so easily compromised. This kind of settlement will only ensure that Facebook’s “solutions” remain part of the problem.

On Libra

Regulators the world over are concerned about Facebook’s new cryptocurrency called Libra that is scheduled to launch in the first half of 2020.

In Facebook’s favor, is its global reach that could help any project like this achieve scale very quickly, theoretically bringing financial inclusion to millions.

But against it is its spotty record in terms of privacy protection, responsible data stewarding, its inability to check fake news and terrorists on its platforms, as well as its blatant disregard for regulatory control and oversight in some cases. Senior executives have also on occasion avoided government summons.

So Facebook’s way of conducting business and the fact that the body controlling Libra will be operating out of Switzerland, where the law shields international citizens hoarding money they can’t account for, doesn’t inspire confidence.

Facebook can claim that it will be one of 100 companies forming the Libra Association, with a single vote to decide important matters. But this feels uncomfortably like a way to wiggle out of difficult situations and doesn’t account for the fact that it will have the most to gain from the initiative.

At any rate, it’s apparent that the government has put off regulating cryptocurrencies for long enough (partly because it is hard to classify, so it isn’t clear which body has jurisdiction over it). This can’t continue going forward, given the growing prevalence of digital commerce and growing number of cashless transactions. Cryptocurrencies are a natural offshoot to this situation and a problem/solution to a problem, regarding which decisions can’t be put off any longer.

Read more: Is Facebook’s Libra Going to Disrupt the Payments Space?

Portal Video Chat Devices

Facebook’s VP of AR/VR, Andrew Bosworth has announced that the company is gearing up to launch new Portal video conferencing devices this fall. The focus will be on encrypted private communications between parties with no provisions for recording conversations.

Facebook Acquires Stake In Meesho

Facebook has invested an undisclosed amount in Indian ecommerce startup Meesho. The platform already has 2 million re-sellers of a broad range of products including jewelry and mobile phones.

The money will be used by the startup “to enable independent entrepreneurs to build businesses and grow their customer base via social channels.” Meesho was founded by a couple of engineering graduates and has earlier raised $65 million from various sources including Shunwei Capital and DST Partners.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Facebook shares carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.” data-reactid=”72″>Facebook shares carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it’s predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce “the world’s first trillionaires,” but that should still leave plenty of money for regular investors who make the right trades early.

>” data-reactid=”75″>See Zacks’ 3 Best Stocks to Play This Trend >>

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<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.” data-reactid=”81″>Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

The Zacks Analyst Blog Highlights: Facebook, Alphabet, Apple and Amazon

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