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Facebook Targeting Kids; U.S. Senate Targeting Facebook
Stock Analysis & Ideas

Facebook Targeting Kids; U.S. Senate Targeting Facebook

Facebook, Inc. (FB) is no stranger to controversy. As of the last few days, it has found itself embroiled in yet another U.S. Senate hearing. This time, the technology company was brought in to discuss the effects of its products on children and younger users. The hearing focused on the photo social networking platform, Instagram. While the testimonies were tough, analysts still believe in Facebook’s core business fundamentals, and foresee growth ahead.  (See Facebook stock charts on TipRanks)

Taking the hearing into consideration for his hypothesis, Brian White of Monness wrote that despite “growing antitrust battles and unfavorable media headlines, we believe Facebook will benefit from improved ad spending and capitalize on accelerated digital transformation with new initiatives.”  

White reiterated a Buy rating on the stock and calculated a price target of $500. This target represents a possible 12-month upside of 45.77% from current levels.  

The five-star analyst elaborated that the “rocky” testimony and the surrounding controversy were sparked by a Wall Street Journal article articulating the dangers of Instagram on mental health. Throughout Facebook’s time with U.S. lawmakers, it appeared that the firm did not satisfactorily dispel the assertions, and will will face yet another subcommittee hearing in the near future.

In response to the uproar against its business tactics, Facebook responded in a formal press release to the article, and has since paused work on an Instagram platform for kids. This project was to target pre-adolescents aged 10-12, and is attracting growing concerns over its possible negatively steered algorithmic effects.  

In the hearing, one senator went as far as to accuse Facebook of “weaponizing childhood vulnerabilities.” Another blunder for the company came when it was made evident that the largely in-person hearing was dealing with a witness over a remote video stream. The witness admitted to already being in Washington D.C., which led to conclusions that she might have been aided in her answers, literally behind-the-scenes, by other Facebook officials.  

On TipRanks, FB has an analyst rating consensus of Strong Buy, based on 25 Buy and 4 Hold ratings, and 1 Sell rating. The average Facebook price target is $422.48, suggesting a potential 12-month upside of 23.17%. FB closed trading on Friday at a price of $343.01 per share.  

Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article

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