Facebook’s stock was downgraded by analysts who cited a “toxic brew” of slowing sales and increased risk for regulation.
The downgrade, a surprise move according to CNBC, came as the analyst firm MoffettNathanson said the social media company will generate earnings below expectations this year.
“We believe that revenue growth deceleration coupled with the company’s long-term margin guidance does not provide a meaningful near-term path for outperformance,” said analyst Michael Nathanson. “Facebook is increasingly under the eye of global politicians and regulators, which will force the company to become more aggressive on spending to show contrition.”
“The deceleration in growth, coupled with continued regulatory scrutiny, is a toxic brew for any stock.”
Facebook’s stock price dropped 3.2% since MoffettNathanson’s statement.
Other factors not specifically mentioned by the firm may also contribute to investor weariness of Facebook, namely its sudden decline in web traffic and the mass censorship controversy, the latter of which is fueling the aforementioned decline.
In particular, Facebook has lost four billion monthly page visits in the past two years, according to BGR which suggested the Internet has hit “peak social” when it comes to the influence of social media sites.
“Facebook losing such a large amount of traffic over the last few years is part of a broad realignment in the social media landscape that’s only going to continue, likely with surprising outcomes,” BGR reported.
The site’s mass censorship of pro-Trump content isn’t helping to keep users on Facebook.
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