Facebook shares up, but will privacy regulation start to impact? Special

Posted Oct 31, 2019 by Tim Sandle
Facebook's stock rose in after-hours trading after the company posted third-quarter earnings that exceeded analysts expectations - at least for now. But what does the future hold for the company and where might the main risks come from?
Facebook chief executive Mark Zuckerberg held private meetings with US lawmakers in Washington to di...
Facebook chief executive Mark Zuckerberg held private meetings with US lawmakers in Washington to discuss technology regulations and social media issues, including concerns about the social network's operations
Brendan Smialowski, AFP
Facebook has posted better than expected results. Much of this is due to advertising sales growth, resulting in overall revenues climbing 29 percent. However Zuckerberg and his company remain intense pressure from regulators in terms of data privacy and fact-checking political advertisements plus there is uncertainty around the plans for the new Libra cryptocurrency.
To gain insight into Facebook's profitability, Digital Journal spoke with senior analyst, Haris Anwar. Despite a recent bounce, this year has not all been good news for the social media behemoth. Anwar begins by looking at the external factors that have accounted for Facebook's relatively sluggish performance so far this year: "The fear of regulatory actions has kept Facebook shares under pressure over the past three months."
However, the latest report represents "another blowout quarter" which was sufficient to "power up the stock, which this summer was flirting with another record high."
Anwar turn this attention to the future, and looks at the main factors that will be impacting upon Facebook: "Going forward, there's no guarantee the challenges for the world’s largest social media platform will disappear. In the latest conference call with analysts in July, the company’s chief financial officer warned that Facebook’s slowdown in revenue growth could extend beyond this year."
As to the reason for this, Anwar's analysis attributes this to "growing limitations on how much personal data Facebook can collect and use for ads will make it tough to make money through advertising sales."
However, what ever happens Facebook will remain strong in the absence of any obvious rival, as Anwar notes: "Despite this tough operating environment and the company’s cautionary tone, the reality is that there is no other platform as powerful nor as global as Facebook is."
He concludes by stating: "It's naive to think that this power is diminishing and despite the ups and downs, I remain bullish on Facebook's stock."