Analyst warns Facebook investors: “systemic mismanagement” poses big risks

By Cale Guthrie Weissman

August 17, 2018

Headlines over the past few weeks–nay, years–have been hard on Facebook. If it’s not a story detailing how the company mismanaged user data, it’s another scathing report about how it misleads customers, can’t get fake news under control, or is killing the news business.

And analysts are getting increasingly worried.

(August 27, 2018), an advertiser filed a lawsuit, seeking class-action status, over Facebook allegedly misrepresenting its “Potential Reach” statistic. In Myanmar, the company’s attempt to fight hate speech is reportedly going terribly. The list goes on.

With all of this, Pivotal analyst Brian Wieser sees a big problem. Though he’s given the company a “sell” rating for a while, these latest headlines further bolster his opinion. “Although we don’t have a tangible sense of financial consequences these situations may bring they are illustrative of systemic mis-management at the company which is mostly under-appreciated as risks by investors,” he writes in a new note.

Wieser goes on, “All of these issues compound our primary concerns on the stock related to the limits to growth for digital advertising paired with rising costs for content, security, and other activities.”

Wieser isn’t the only one sour on Facebook. After its last earnings report, multiple analysts downgraded the company’s stock. And even though that was a few weeks ago, the company isn’t faring much better. Shares continue to stumble, down to $173 today, compared to its peak over $218 late last month.