Why Facebook’s (FB) Biggest Bear Sees an 18% Stock Decline

What does it take to have Facebook (FB) remove an account? Do you have to be a sexual harasser? A pedophile? A drug dealer? And how long will it take? If you’re a shady Russian cyber scraper called SocialDataHub, it’ll be about four years. Pivotal analyst Brian Wieser says that’s exactly the problem. Wieser believes Facebook isn’t allocating enough time or resources into solving problems that affect users. Instead, the company is concerned with what’s up ahead.

As such, the analyst maintained a Sell rating on FB stock with a price target of $131 — a near 16% decrease from where the stock is currently trading. (To watch Wieser’s track record, click here)

“The underlying problem that we see is that the company has been so focused on growth at any cost that it has failed to sufficiently invest in processes that might anticipate problems, acknowledge problems fast enough or fix problems fast enough,” Wieser said.

SocialDataHub is a Russian company that refers to itself as the “Russian Market.” Its CEO also told the New York Times that the Russian Defense Ministry was a client of theirs. The account was suspended from Facebook and Twitter for cyber scraping, a technique used to mass copy and paste data into spreadsheets for later analysis. The concern is – just what data is being collected and what is it being used for? This scandal is just a grain of rice in the storehouse of many Facebook privacy issues to be revealed in the last year.  Wieser believes the problems can be solved, but aren’t high enough on the company’s priority list.

“We’re not doubting they can’t be fixed, but the fact that problems keep emerging reinforces our view that the company is not as in control of its business as it needs to be. As problems are fixed, costs will rise, possibly faster than the company has anticipated (if only because the company is slow to acknowledge problems requiring fixing). And then other problems with more material commercial consequences might still come to light,” the analyst suggests.

Based on the word of the Street, Wieser seems to be the sole bear on the social media giant. Facebook is one of Wall Street’s favorite stocks, considering TipRanks shows a unanimous bullish vote from 33 analyst along with 6 fence sitters. With a solid return potential of 28%, the stock’s consensus target price stands at $204.20. (See FB’s price targets and analyst ratings on TipRanks)


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