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Analyst: FTC Could Hit Facebook With $1-2 Billion Fine, The Largest In Agency History

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Analyst: FTC Could Hit Facebook With $1-2 Billion Fine, The Largest In Agency History
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The U.S. Federal Trade Commission confirmed that it is investigating Facebook, Inc. (NASDAQ: FB) for potential misuse of customer data, and investors are understandably concerned about the potential for actions such as increased regulation and stiff penalties for the social media platform.

The Facebook saga is unfolding on a seemingly daily basis, and Height Capital Markets analyst Stefanie Miller said in a Tuesday note that investors may not have answers to their questions for at least another six months.

The FTC investigation will likely take at least six months and will ultimately result in a fine of as high as $1-2 billion, the largest in its history, Miller said. 

“While we do not expect U.S. regulators to take actions similar to the European Union’s General Data Protection Regulation, we think investigations by the FTC and states' attorneys general, combined with the threat of additional legislation, particularly in California, will continue to place pressure on Facebook if not the industry more broadly to establish a very clear set of internal auditing and reporting standards for user data,” Miller said. 

Aegis Capital Sticks To Bullish Facebook Thesis 

While Facebook stock could remain under pressure in the near-term, Aegis Capital analyst Victor Anthony said Tuesday that long-term investors should ignore the noise and simply weather the storm. The average Facebook user is paying little attention to the data drama, the analyst said. 

“Our belief is that any user defections will be on the margin and [are] unlikely to be material,” Anthony said. “Advertisers are ROI-focused and all of our checks over the past few years have shown nothing but increasing ROIs on the platform.”

Aegis has lowered its price target for Facebook from $220 to $215 but maintains a Buy rating.

Editor's note: This article originally said the fine could reach up to $2-3 billion. This was incorrect.

Related Links:

The Facebook Data Controversy: What Wall Street Thinks

Twitter Investors Sacred Off By Facebook Privacy Concerns

Latest Ratings for FB

DateFirmActionFromTo
Dec 2018GuggenheimInitiates Coverage OnNeutral
Dec 2018Stifel NicolausDowngradesBuyHold
Nov 2018ArgusMaintainsBuyBuy

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