Wednesday’s announcement by Facebook that their shares were up in after-hours trading comes at a time when storm clouds are gathering for this social media giant by the FTC (Federal Trade Commission).
The FTC announced that they have opened up an anti-trust investigation into the company to the tune of $5 billion for privacy violations. The government allegedly cited numerous cases of sneaky behavior
Now, this new investigation by the FTC is a separate issue from the $5 billion privacy settlement connected with the Cambridge Analytica scandal which is the biggest fine yet levied on a tech company.
The Cambridge Analytica scandal involved the collection of details on as many as 87 million Facebook users without their knowledge or permission.
That’s not all…
In addition to the settlement, Facebook is required to implement new privacy controls.
Facebook has become the target of a growing number of investigations in the European Union and indeed across the world, these investigations are expected to wrap up this year.
They also face becoming a target of government regulation, depending if Congress can pass legislation before the year-end into user privacy and data collection.
Hold on a second, if you think about it
This latest fine won’t make a dent in the revenue that they made last year of nearly $56 billion.
Here are the numbers released for the Q2 2019 earnings report from Facebook versus the prediction of market experts:
• Revenue: $16.9 billion versus forecasts of $16.5 billion
• EPS: $1.99 versus $1.88 expected
• Daily active users: 1.59 billion versus 1.57 billion
• Monthly active users: 2.41 billion versus 2.42 billion
In response to the latest FTC investigations
Mark Zuckerberg, CEO of Facebook said that they are investing in building stronger privacy protections including delivering new experiences for everyone who uses Facebook services.
In the first quarter of this year, Facebook put aside $3 billion for the fine and had to add an additional $2 billion after the FTC announced the settlement fine.
Facebook’s Q2 earnings report is a highly anticipated event for market participants. They want to know whether the profits from the giant social media company will have a big chunk taken out of it due to the increased focus of government and public scrutiny.
And another thing…
Will Facebook’s digital coin, Libra generate positive momentum in the stock price?
Libra has some of the biggest consortium of partners made up of financial, technological and non-profit sectors.
Names like MasterCard, Uber, eBay, Lyft, Facebook, Spotify, Vodafone, Liad and others. They will also be waiting to see the results of the Q2 earnings report.
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