Facebook has received serious blowback over revelations that Russia used the social network to meddle with last year’s U.S. presidential election. But don’t expect that criticism to impact the company’s financials or stock price, says one analyst.
Mark Mahaney, managing director at RBC Capital Markets, contends Facebook’s stellar financial run, which includes 16 consecutive quarters of mid-double-digit revenue growth, will continue. He also maintains an “Outperform” rating on Facebook (FB) stock and predicts the social network will generate $39.9 billion in 2017 revenues, largely from advertising — an estimate that remains unchanged in light of Facebook being in the news.
Indeed, there are only two hypothetical scenarios Mahaney says could cause advertisers to flee Facebook in droves: if someone at Facebook colluded with Russia to sway last year’s election, or if there were a massive Equifax-like breach that somehow affected users and undermined their trust in the social network.
Obviously, those are simply hypothetical scenarios. In reality, Facebook acknowledged earlier this week that an estimated 10 million users of the social network saw ads purchased by a Russian company to influence U.S. politics. On Monday, the social network handed over 3,000 of those ads to Congressional investigators.
While a Facebook spokesperson told TechCrunch those ads appeared to exploit racial and social divisions, as well as ugly stereotypes, Mahaney suggested the impact those ads had on the presidential election serves as a stark reminder to advertisers of Facebook’s sway as the third-most trafficked website in the world, according to web traffic site Alexa.
What about investors?
Likewise, investors aren’t likely to panic and punish Facebook’s stock, according to Mahaney. The stock has climbed nearly 37% so year-to-date, but dipped 4.5% last week, possibly due to reports indicating Facebook CEO Mark Zuckerberg would sell up to 75 million shares of company stock over the next 18 months, as well as a Washington Post exposé alleging Zuckerberg brushed aside warnings from President Barack Obama about fake news two months before President Donald Trump’s inauguration. This week, Facebook stocked dipped less than 1%, amid news that the social network was turning over Russia-linked ads to Congressional investigators.
“High-level investors don’t really like those kind of headlines,” Mahaney says, referring to the flurry of stories floating around the internet somehow associating Facebook with Russia. “But you know, again, I think most investors would look at this and say, ‘Wow, this has got to be a pretty powerful platform if it could influence an election.’”