Facebook Analyst Expects 'Pragmatic' Solution To EU Data Transfer Challenges

The Irish Data Protection Commission has commenced an inquiry into Facebook, Inc’s FB data transfers between the U.S. and the European Union for its flagship social platform as well as Instagram.

If the company temporarily suspends services in the EU, which is highly unlikely, 410 million users will be unable to access their Facebook and Instagram accounts, according to BofA Securities.

The Facebook Analyst: Justin Post maintained a Buy rating on Facebook with a $335 price target. 

The Facebook Takeaways: Europe contributed 24% of Facebook’s total revenue in the second quarter of 2020, Post said in a note.

Thousands of businesses rely on standard contractual clauses, including financial institutions and call centers, the analyst said. 

"As a result, we think if this ruling upholds, it would not only apply to Facebook but also other businesses that rely on SCCs, including other large social media companies, and could have significant consequences for the European economy," he said.   

"Given the magnitude of European economic impact and potential US government pushback, we think the likely outcome is that regulators will adopt a more pragmatic approach and reach a more sustainable long-term solution."

FB Price Action: Shares of Facebook were trading 1.77% higher at $252.54 at last check Tuesday. 

Posted In: BofA SecuritiesJustin PostAnalyst ColorEurozonePrice TargetReiterationMarketsAnalyst Ratings