Is Facebook Investable? | Jason Calacanis on CNBC's TechCheck | Summary and Q&A

TL;DR

Facebook's stock is down, and concerns about advertising targeting, regulatory overhang, and whistleblower allegations pose challenges. However, user engagement remains strong, advertisers continue to invest, and new initiatives like shops are expected to boost the stock in the future.

Key Insights

• 👤 User engagement and advertiser investment are crucial indicators for Facebook's future success.
• 💱 The impact of whistleblower allegations on the stock remains uncertain, as specific changes and their resolution have yet to be revealed.
• 🖤 The lack of major acquisitions could hinder Facebook's growth potential, but e-commerce-related revenues from new initiatives like shops offer optimism.
• 🤨 Zuckerberg's leadership style and the company's track record of prioritizing growth over societal concerns raise doubts about long-term prospects and decision-making.
• 🖐️ Public perception and advertiser sentiment will play a significant role in shaping Facebook's future trajectory.
• 🧑‍⚕️ Concerns over mental health, misinformation, and societal impact could potentially drive changes in Facebook's algorithm and product design.
• 💱 Facebook's ability to navigate regulatory challenges and implement responsible changes will influence investor sentiment and stock performance.

Transcript

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Questions & Answers

Q: What challenges does Facebook face in terms of advertising targeting?

Facebook is grappling with challenges related to the IDFA impact, engagement concerns, and regulatory overhang. However, the company remains optimistic about its user engagement and advertisers' continued investment.

Q: Can the whistleblower's allegations force major changes in the way Facebook operates?

While the whistleblower's revelations have sparked concerns, it remains unclear what specific changes might occur. The analyst points out that Facebook is actively investing in moderation and privacy, indicating its willingness to address these issues.

Q: What risks should investors consider before buying Facebook stock?

Investors should carefully assess their moral values and evaluate Facebook's alignment with those values. Advertiser sentiment can impact the stock, but current fundamental indicators suggest stability and long-term prospects for the company.

Q: What would signify an all-clear to invest in Facebook stock?

According to an angel investor, concrete changes in Facebook's behavior, such as age gating, parental controls, or limits on usage, would indicate a more responsible approach. However, the investor remains skeptical about significant changes under Zuckerberg's leadership.

Summary & Key Takeaways

• Facebook's stock is down by more than 2% and 16% since September, making it one of the biggest laggards on the NASDAQ 100.

• An analyst from Bernstein questions whether Facebook is investable due to various challenges, including advertising targeting and regulatory issues.

• Despite these challenges, the analyst has a buy rating on the stock, citing strong user engagement, advertiser loyalty, and upcoming initiatives such as shops.