Following reports by the New York Times and the Guardian on March 18 that 50 million profiles on Facebook were harvested by Cambridge Analytica the data company, to be used for psychographic profiles in what at that time was called a major breach of Facebook user trust, the social media giant’s stock started to bleed heavily with shares falling as much as 24% equal to losing over $134 billion in the process.
However, fast forward to the present and Wall Street has forgotten about the breach of trust. Following a strong earnings report by Facebook and an uneventful yet nonetheless high-profile appearance in front of Congress by CEO Mark Zuckerberg, the company’s stock has recouped its losses in full from the scandal brought on by the Cambridge Analytica breach.
Although there is the possibility of a federal fine in the billions of dollars and less profitability due to tighter regulations, Wall Street had remained optimistic over the earning potential of the social network.
Most analysts expect Facebook stock to return to its highs of January and beyond as investors have become excited over the initiatives being implemented such as its dating app and talk of a subscription service free of advertising.
In testimony before Congress, Zuckerberg pledged a version of Facebook would remain free, with the logical conclusion there will be versions that will not be free.
Facebook is planning to launch its own smart speakers that will take on Echo products from Amazon that are Alexa-powered. The social network continues pushing hard into Virtual Reality with Oculus, which recently launched the Oculus Go a standalone headset that costs just $199.
One analyst sent out a note to his clients that said he believed the different efforts by Facebook will continue generating significant growth in operating income for years to come.
Prices targets by analysts for Facebook stock have been set as high as $202 which is close to 9% over the current level
The latest earnings released by Facebook showed that its operating income increased by 64% during the most recently ended quarter to over $5.4 billion. Revenue for the same period was up 49%.
Active monthly users increased by 13% to over 2.2 billion, which came as somewhat of a surprise since historically the year’s first quarter has been the slowest for Facebook, which suggests that even bigger numbers are ahead.