Top Analyst Shares Two Cents on Facebook (FB) Stock Following Zuckerberg’s Pro-Regulation Op-Ed


More regulation of Facebook (FB)?

Well, that’s the argument coming from one of the most unlikely voices — CEO Mark Zuckerberg himself. In a recent op-ed, Zuckerberg called on “governments and regulators” to update “the rules for the Internet,” in order to allow for the “freedom for people to express themselves and for entrepreneurs to build new things.” The CEO even called for more countries to implement Europe’s GDPR, which may come as a surprise given the restrictions it places on Internet companies in regards to user data, which is generally used to make money.

Even as many may be surprised by Zuckerberg’s call for more regulation, SunTrust’s Youssef Squali is not. The analyst says Zuckerberg’s “commentary echoes the evolution of his position on these issues at a crucial time when data breaches and harmful content continue to permeate the Internet unabated.” Zuckerberg’s position “is also being expressed during a period of heated electoral politics when regulators from the US to India are sounding the alarm on the power Facebook wields over speech, and are calling for more oversight.”

Zuckerberg seems to be “acknowledging that these issues are too big and too difficult for a global industry to handle on its own,” Squali says. He contends that “by having regulators set clearer rules around issues including data privacy, harmful content, election integrity and data portability, the responsibility of enforcing these rules will fall first and foremost on the regulators,” as opposed to the industry and Facebook.

Overall, Squali sees this as a “shrewd” move that is “puts the onus of resolving these issues on regulators.” The analyst believes Facebook “is likely best positioned to comply with the rules once set up by regulators, as we’ve seen with GDPR in the EU.” Perhaps most importantly, the analyst says “GDPR has had virtually no negative affect on Facebook so far in terms of user growth or monetization,” which bodes well for the company facing regulation in “other geographies as well.”

As a result, Squali reiterates a Buy rating on FB stock, with a price target of $210, suggesting the stock may rise in the coming months by over 20%. 

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Squali has a yearly average return of 22.8% and a 70% success rate. Squali has an average return of 77% when recommending Facebook and is ranked #46 out of 5,222 analysts.

All in all, for a brief time, Facebook was a question mark for many investors. But it seems the company has rebounded nicely. TipRanks analysis of 40 analysts shows a consensus Strong Buy. 33 of those analysts rate the stock a Buy, while six issue a Hold and only one says Sell. The average price target among these analysts stand at $193.94, which represents about 12% upside from current levels. (See FB’s price targets and analyst ratings on TipRanks)