Don’t be misled by the message from Facebook’s stock (FB) running up a borderline insane 55% so far this year — this is one wildly risky tech investment.
If not the riskiest among the FAANG (Facebook, Apple, Amazon, Netflix and Alphabet’s Google) cohort because of heightened scrutiny by worried lawmakers.
“There is going to be an enormous amount of focus on how Facebook polices content during the upcoming election — which is why I personally think they are the riskiest of the tech names from a policy perspective,” Isaac Boltansky, Compass Point director of policy research, said on Yahoo Finance’s The First Trade. “I think any struggles they have in policing the election are going to be front page items and there will be intense focus on Capitol Hill.”
Boltansky continued, “So from that end of the political sphere, they have the most risk out of all the Big Tech names.”
It’s hard to argue with Boltansky’s sentiment.
Nonetheless, a strong bid remains under Facebook’s stock price into its second quarter earnings release on July 24. Most on Wall Street Yahoo Finance has chatted with are upbeat on Facebook’s user growth potential and retention. Lost in all these conversations is a sense of fear around the stock price from ongoing backlash in DC that could lead to profit crushing regulation on Facebook.
This collective bullish group perhaps should be more closely watching how Facebook is faring on Capitol Hill this week. Indeed it hasn’t been pretty.
Heavy criticism of Facebook’s crypto plans
The social media giant has been blasted this week amid fears its new cryptocurrency project Libra would harm consumers (among other negatives to it). In two days of testimony, lawmakers have used Libra concerns to stoke fresh worries on Facebook’s power.
At times, the testimony has been contentious to say the very least.
The top Democratic Senator on the Banking Committee Sherrod Brown told Yahoo Finance’s Jessica Smith Facebook should be broken up. Brown certainly pulled no punches on his broader views on the company’s position in society.
“They wreaked too much havoc on our economy 10 years ago because of their market power, and we're seeing the same in the tech companies. That's why people in this country went from loving the tech companies over the last many years until the last four or five years to being very suspicious to the point of so many people now say, ‘break them up,’ because they have too much market power,” said Brown.
Brown called Facebook “dangerous” and ripped the company over Libra.
Brian Sozzi is an editor-at-large and co-host of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi
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