Gene Munster Talks WhatsApp, Facebook And Doing 'The Right Thing'

WhatsApp will no longer assist Hong Kong law enforcement with user data sharing, and Loup Ventures' Gene Munster told CNBC that this is consistent with parent company Facebook, Inc. FB wanting to "do the right thing."

What Happened: Facebook is trying to balance human rights issues in China with a commercial business, but its decision marks yet another "catch 22" for the company, Munster said.

By restricting its cooperation with authorities in Hong Kong, Facebook risks seeing limitations on its WhatsApp platform, the research analyst-turned-venture capitalist said. 

The messaging platform accounts for less than 5% of Facebook's total revenue, he said. 

Why It's Important: Despite what appears to be a fresh headwind for Facebook, the stock continues to trade near all-time highs, with a valuation of around $650 billion, Munster said.

At the same time, the market is assigning such a high valuation to a company whose core product is a "toxic platform" from a rhetoric perspective, he said, adding that Instagram is "more benevolent."

What's Next: Looking forward, Facebook could see more of its advertisers taking a closer look at how the platform curates its content, Munster said.

By definition, if Facebook curates the content on its platform, it will become a "publisher," and that comes with different rules and regulations, he said. 

At the end of the day, investors "love to sleep well at night" knowing the company is moving in the right direction, Munster said. But in Facebook's case, he said the latest Hong Kong update along with more ongoing headwinds will lead to monetization concerns.

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