Facebook (FB) Stock: Falling On Short Report

Facebook FB Stock NewsFacebook, Inc. Common Stock (NASDAQ: FB) is in the red this morning following a short report by Pivotal Research analyst Brian Wieser. According to his research, overstated ad reach and poor moderation will cause pain for the world’s leading social network. Today, we’ll talk about:

  • The short report;
  • what we’re seeing from FB stock as a result; and
  • what we’ll be watching for ahead.

Is FB In Trouble After The Pivotal Research Short Report?

As mentioned above, Facebook isn’t having the best of trading sessions in the market today after a short report targeting the company was released. In a note to investors, analyst Brian Wieser from Pivotal Research maintained a Sell rating on the stock and set a price target of $140.00.

In the report, the analyst pointed to a law suit surrounding over stated ad reach. In fact, the lawsuit relates says that FB may have overstated ad reach by between 30% and 50%. The analyst also explained that reports are rising that FB ignored complaints related to its contribution to issues in Burma. Explaining that 60 moderators isn’t enough to accomodate a user base of 18 million, Mr. Wieser sees declines ahead. Here’s a key snippet from his note:

A lawsuit related to reach data in Ads Manager and new reporting on how Facebook ignored concerns related to its contribution to problems in Burma further illustrate systemic problems with the company.

New reporting from Reuters on Wednesday was further damning for the details it described about warnings Facebook senior management received as far back as 2013. Facebook has acknowledged that it was too slow to respond, but as Reuters reported, only last week their reporters were able to find “more than 1,000 examples…of posts, comments, images and videos attacking the Rohingya or other Myanmar Muslims that were on Facebook as of last week” advocating genocide or other dehumanizing actions. In the article, Facebook acknowledged that “all of it violated our policies.” With only 60 moderators for a user base of 18 million, Facebook’s efforts clearly seem insufficient to avoid further problems in the region.

What We’re Seeing From The Stock 

While Facebook is the head hancho of the social media world, its stock is not immune to the effects of a concerning short report. As a result of the report, the stock is trading in the red this morning as investors fear that Weiser may be onto something here. Of course, our partners at Trade Ideas were the first to alert us to the declines. Currently (10:48), FB is trading at $172.68 per share after a loss of $2.02 per share or 1.16% thus far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on FB. In particular, we’re interested in seeing if the company responds to the Pivotal Research report, and if so, what that response might be. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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