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Gene Munster: After Facebook Fallout, Investors Could Flock To Privacy Safe Havens

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Gene Munster: After Facebook Fallout, Investors Could Flock To Privacy Safe Havens
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Amid the fallout over Facebook, Inc. (NASDAQ: FB)’s privacy concerns, investors may pay special attention to “privacy safe havens” Apple Inc. (NASDAQ: AAPL) and Amazon.com, Inc. (NASDAQ: AMZN), said Loup Venture's Gene Munster. 

Facebook’s New Risk Factors

After news broke of unauthorized user data being collected through Facebook by the firm Cambridge Analytica, the social media platform became exposed to the risk of user attrition due to lost trust, Munster said in a note. 

If Facebook does not meet its daily active user  growth estimates, shares could be negatively impacted this year, he said.

“While it’s still early to tell how serious this bout of outrage against Facebook will ultimately be, Twitter and Snap may have an opportunity to benefit if users do leave Facebook.”

Potential regulatory measures as a result of this fallout could also pose a risk — not just to Facebook, but to all companies that rely heavily on monetizing data, Munster said. 

Apple’s Privacy Ethos

Apple has placed a strong emphasis on customer privacy, claiming it to be a “fundamental human right." 

Apple does not gather personal information to sell to advertisers, and whenever third-party vendors are used to store information, it is encrypted, Munster said. 

Amazon: Service First

Amazon is another FAANG stock that could be exempt from investor concerns over privacy. The company is strongly driven by its core services, and advertising revenue makes up less than 3 percent of the company’s revenue, Munster said. 

“Advertising has never been a focus of the company, and it’s inconceivable they would abandon their current core businesses to pivot to an ad-first model that leaves them exposed to the risks we’ve highlighted in this note." 

Price Action

Facebook shares were down 2.48 percent at the time of publication Monday morning. Amazon was up 1.9 percent and Apple was up 2.12 percent. 

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Latest Ratings for FB

DateFirmActionFromTo
Dec 2018Tigress FinancialReiteratesBuyBuy
Dec 2018GuggenheimInitiates Coverage OnNeutral
Dec 2018Stifel NicolausDowngradesBuyHold

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Posted-In: Cambridge Analytica Gene Munster Loup Ventures social mediaAnalyst Color Top Stories Analyst Ratings Tech Best of Benzinga

 

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