Investors Put Facebook's Privacy Issues in Rearview Mirror--Update
July 24 2019 - 5:41PM
Dow Jones News
By Jessica Menton
Privacy woes can't keep Facebook down.
The social-networking giant, which has come under scrutiny for
its privacy practices, said Wednesday that it agreed to pay a $5
billion fine over a long-running probe into the company's security
issues.
Nevertheless, investors are still bullish on Facebook. Shares of
the company have rallied 56% so far in 2019, a sharp reversal after
mounting privacy fears battered the stock last summer. The stock
rose 1.1% on Wednesday to close at $204.66 after Facebook's
settlement announcement.
One reason why: Investors are still optimistic on Facebook's
advertising business. Last month, the company said it is ramping up
its global advertising spending as it aims to rebuild trust with
consumers. The move, according to Facebook marketing chief Antonio
Lucio, could more than double the company's advertising
spending.
Facebook shares ticked higher in after-hours trading Wednesday
following strong-than-expected revenue growth in the second
quarter. Sales in the company's lucrative advertising unit rose 28%
to $16.6 billion last quarter from a year ago.
"As long as there's a great return on investment for these
advertisers, they're going to continue to spend money on Facebook's
platform," said Carter Henderson, portfolio specialist and director
of institutional development at Fort Pitt Capital Group. "A lot of
the public probably doesn't trust Facebook yet, but investors are
ready to move on from the security breaches, looking for future
growth."
Analysts at Goldman Sachs reiterated their "buy" rating on
Facebook on Wednesday with a 12-month price target of $228, citing
a favorable outlook for the company's digital-advertising
trends.
Write to Jessica Menton at Jessica.Menton@wsj.com
(END) Dow Jones Newswires
July 24, 2019 17:26 ET (21:26 GMT)
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