Facebook Inc. (FB) saw $100 billion shaved off its market capitalization in recent weeks on fears of a backlash from both users and regulatory agencies regarding the social media giant's latest data scandal. Amid the sell-off, one investment bank has come out with a survey suggesting that fears of a user exodus may be overblown.
Trading down 1.5% at $153.12 on Tuesday afternoon, the social media stock reflects a 13.2% loss year-to-date (YTD), compared to the Nasdaq Composite Index's 0.4% decline and the broader S&P 500 Index's 3.2% dip over the same period.
Last month, news broke that data analysis firm Cambridge Analytica allegedly used information on over 50 million Facebook users without their consent to aid the Trump campaign in crafting political ads for the 2016 U.S. presidential race. While investors have punished Facebook and its FAANG peers this year, analysts have been reluctant to turn sour on the companies, highlighting solid earnings growth forecasts and continued leadership in their markets. (See also: Why Wall Street's Analysts Won't Give Up on Tech.)
App Deletions Overblown
Deutsche Bank Markets Research came out with a survey on Monday suggesting that despite privacy woes, Facebook users remain loyal to the platform, as reported by Barron's. The investment firm found that just 1% of the 500 users surveyed said that they deleted the social network in the past week following news of the data scandal.
"Data in the [Facebook] platform also shows no meaningful change in audience size, albeit modest weakness in young demos internationally of late," wrote Deutsche. Nonetheless, while the bank cut its 12-month price target on Facebook to $200 from $235, reflecting an over 30% upside from Tuesday morning, the analysts wrote that shares are undervalued for long-term investors.
Other key takeaways from the Deutsche survey include that while very few people are deleting Facebook, many are using use it less or intending to do so. Facebook's Instagram, which heads off against Snap Inc. (SNAP) in the photo and video sharing app segment and has become an integral platform for advertisers' increasing digital spend, is set to be the firm's biggest beneficiary, according to Deutsche. The bank also suggested that trust is modestly higher at Alphabet Inc. (GOOGL) than at Facebook and that few users would pay for an ad-free Facebook platform. (See also: Zuckerberg, Cook Continue to Insult Each Other.)