Facebook poised for 2019 comeback, noted short-seller says

Facebook is in position to rebound in 2019 after weathering a series of data breaches and privacy scandals with little impact to its user base, according to prominent short-selling firm Citron Research.

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The social media platform maintains a base of 2.2 billion active users, even as the fallout from the Cambridge Analytica data breach and other negative publicity drove share prices down about 30 percent for the year. Facebook’s advertising platform and burgeoning e-commerce efforts through Instagram should boost revenues in coming quarters, according to Citron, which set a price target of $160 for the company in 2019.

“Yet, while the media has reported on one scandal after the next and the [New York Times] even tried to promote a #deletefacebook movement, the truth is revenues and more important user base has seen little impact,” Citron Research said in a note to investors, adding that “investors will be rewarded by the shift of user behavior to Instagram shopping and the personalization of the commerce process.”

Facebook shares rose more than three percent in trading Wednesday to roughly $128.60 per share as of 11:15 a.m. ET.

Facebook executives Mark Zuckerberg and Sheryl Sandberg each appeared before Congress earlier this year in the wake of the Cambridge Analytica breach, with exposed the personal data of up to 87 million users. The platform has also faced allegations that it exploits and misuses the data of its users.

Citron argues that the privacy concerns are overblown, especially given the revenue potential of Facebook’s e-commerce efforts.

“Books have been written and movies have been made on the Facebook is evil topic, but never before has Facebook been this compelling of an investment opportunity,” the firm wrote. “As investors have become overly concerned about the short-term noise of privacy and propaganda, they have forgotten to look at the earnings power and potential of the most advanced advertising tool with global reach in messaging, networking, and the future of shopping.”