Facebook’s WhatsApp Delays Privacy Update

Facebook-owned WhatsApp has decided to push back a privacy policy update that has become a major source of concern for users of the platform and has led many customers to delete their WhatsApp accounts.

Last month, Facebook (FB) launched the ‘Carts’ feature on WhatsApp, which allows users to interact directly with businesses. Carts allows users to browse catalogs, select multiple products and send orders via WhatsApp, making buying and selling much easier.

The privacy updates allow businesses to store and manage WhatsApp chats with their customers and could allow these businesses to use the information to advertise to customers through Facebook, but many users are concerned that these updates would lead to the sharing of personal messages with Facebook.

WhatsApp released a statement on its blog, stating that it was moving back the date on which people will be asked to review and accept the terms. “No one will have their account suspended or deleted on February 8. We’re also going to do a lot more to clear up the misinformation around how privacy and security works on WhatsApp. We’ll then go to people gradually to review the policy at their own pace before new business options are available on May 15,” according to the company. (See FB stock analysis on TipRanks)

Merrill Lynch analyst Justin Post reiterated his Buy rating on Facebook last week, setting his price target at $345. This implies upside potential of around 37% from current levels.

Since WhatsApp unveiled its updated data policy, Facebook shares have been selling off. However, Post believes that the impact on FB shares will be short lived. He added that he continues to see WhatsApp as an important driver of potential future stock value for Facebook.

Consensus among analysts is a Strong Buy based on 31 Buys, 2 Holds and 1 Sell. The average price target of $324.84 suggests upside potential of around 29% over the next 12 months.

FB scores a 7 out of 10 on Tipranks’ Smart Score rating, indicating that it is likely to perform in line with market averages.

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