Facebook: Investing in stock has 3 risks, analyst says

Facebook CEO Mark Zuckerberg takes a drink of water as he testifies before a House Energy and Commerce hearing on Capitol Hill in Washington, Wednesday, April 11, 2018, about the use of Facebook data to target American voters in the 2016 election and data privacy.AP Photo/Andrew Harnik

• Facebook recently announced it would delete a Russian firm’s accounts over alleged data scraping and take down a series of accounts that were said to be focused on entertainment but were instead tied to military personnel in Myanmar.
• The social media giant is “not as in control of its business as it needs to be,” said Brian Wieser, an analyst at Pivotal Research Group.
• Wieser, a long-time Facebook bear, laid out three major risks that investors should consider when buying the stock.
• Watch Facebook trade in real time here.

Facebook has been busy dealing with security issues over the past week, taking down the Russian firm  SocialDataHub’s accounts over alleged data scraping, as well as a series of accounts that were said to be focused on entertainment but were instead tied to military personnel in Myanmar.

These were the latest in a series of problems that have surfaced at Facebook over the past few years, the big one being the Cambridge Analytica data scandal surrounding the 2016 presidential election. 

All these may suggest the social media giant is “not as in control of its business as it needs to be,” Brian Wieser, an analyst at Pivotal Research Group, said in a note sent out to clients on Wednesday.

Wieser, a long time Facebook bear, who has a “sell” rating and $131 price target — 18% below where shares are currently trading — laid out three major risks that investors should consider when buying the stock.

1. High degree of rivalry given absence of barriers to deter new competition from emerging