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Apple’s Steve Wozniak May Join #DeleteFacebook Campaign

Zacks

Facebook, Inc. FB has received another blow amid the fiasco related to the Cambridge Analytica data breach incident that impacted the 2016 U.S. Election results. Most recently, Apple’s AAPL co-founder Steve Wozniak declared the deactivation of his Facebook account pertaining to the data scandal that has left users’ personal information at stake.

Notably, Wozniak will be another influential person to join the #deletefacebook campaign that was initiated by WhatsApp co-founder, Brian Acton, via a tweet requesting his followers to delete Facebook. Also, Tesla, Inc.’s TSLA billionaire co-founder, Elon Musk’s decision to delete the Facebook pages of both Tesla and Space has been a major headwind for Facebook. The data privacy and security issues on the platform were criticized by Apple’s CEO, Tim Cook, as well.

Furthermore, the Indonesian government has warned the social media platform that if any allegation related to influencing the upcoming election results surfaces against the company, the application will be stopped in the country.

This alleged data misuse scandal not only compromised the personal data of around 87 million users but has also taken a toll on Facebook’s share price movement. The company’s shares have lost around 7.8% since the news went viral on Mar 19.



Zuckerberg’s Initiatives for Damage Control

Facebook’s CEO Mark Zuckerberg has been trying to recover the company’s brand image that got dampened due to all the criticism and backlash post revelation of the data scandal.

Zuckerberg will be reportedly testifying in an apologetic tone as he confronts a “joint hearing of the Senate Judiciary and Commerce committee” on April 10 and a “House committee” on Apr 11. The CEO has already apologized for the mishap via full-page ads in three newspapers in the United States namely — The New York Times, Washington Post and Wall Street Journal —and seven newspapers in the U.K.

The company has also been gearing up to keep its word of maintaining data privacy as stated in the apology statements. To this end, Facebook recently removed more than 270 accounts and pages operated by the Russian organization, Internet Research Agency (IRA), which were aimed at influencing the 2016 U.S. presidential election.

With an aim to add clarity to political advertisement, the company recently announced that only authorized advertisers will be able to post political ads going forward, which will be labeled as “Political Ad” bearing “paid for by” information. Moreover, it is adding a “view ads” feature that will help checking out all the ads running on a Page. A searchable archive of political ads is in the pipeline too.

Furthermore, Facebook suspended two more data analytics companies, namely CubeYou and AggregateIQ over unauthorized handling of user data. It is also investing in artificial intelligence (AI) and recruiting more people for handling data security and content.

The Silver Lining

Notably, Sequoia Fund bought a minority stake in Facebook despite the difficult situation, reaffirming the strong fundamentals of the company.

Sequoia’s statement “Though Facebook has unquestionably committed sins for which it must now atone, we believe it remains a far more competitively advantaged, economically attractive and faster-growing enterprise than the average American business”, is a further testament to the fact that all is not over for Facebook.

We believe, Facebook’s efforts to plug security loopholes as well as limit fake news will eventually boost trustworthiness. Also, the company’s security measures and the tweak in its platform to prevent false news, hate speech and other abusive content are likely to build user base in the long run, thereby proving accretive to this Zacks Rank #3 (Hold) company's portfolio.

Key Pick

A better-ranked stock in the same technology sector is Twitter, Inc. TWTR sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Long-term earnings growth rate for Twitter is projected to be 21.5%.

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