Facebook Falls 7% on Data Scandal

Facebook shares have slumped following the Cambridge Analytica scandal. The pull-down in Facebook has also dragged down Snap and Twitter

Ali Mogharabi 20 March, 2018 | 7:50AM

Facebook shares have falled 7% following a data concern

The recent news surrounding the security of Facebook (FB) users’ personal data has dragged the stock down 7%. The controversy may further justify Europe’s General Data Protection Regulation campaign, the enforcement of which will begin in May, and increase the probability of similar demands in the U.S. We’ve accounted for such risk, to a certain extent, in our model, which has much lower than consensus projections over the next five years, but the news is concerning, and we continue to analyse possible impacts from it on our valuation of Facebook and its peers.

In the meantime, even with the recent pullback in Facebook shares, they remain in three-star territory, meaning they are fairly valued. Morningstar equity analysts are maintaining their $198 per share fair value estimate for this wide-moat name.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Facebook Inc A267.67 USD-5.51
Snap Inc Class A42.86 USD3.18
Twitter Inc48.53 USD-5.34

About Author

Ali Mogharabi  is an equity analyst for Morningstar

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