Citi analysts kept a 'Buy; rating on Facebook Inc. (NASDAQ: FB) Wednesday but analysts said that vestiges of uncertainty continue to dog the social media giant, despite CEO Mark Zuckerberg's skillful testimony before Congress Tuesday.
Facebook traded marginally lower Wednesday, down 0.4% at US$164.31, as Zuckerberg appeared before a House Energy and Commerce panel for a second day of questioning.
Citi noted that investors had reacted favourably to Zuckerberg's "poise and solutions-based answers” during a nearly five-hour grilling in the Senate on Tuesday, but it’s still a long road ahead for the company after a series of events that exposed privacy concerns for its more than 2 billion active users.
“While new regulations in the U.S. may not materially impact Facebook's business, other factors, including proactive changes Facebook itself makes, pending regulatory changes in Europe, and possible fines by the Federal Trade Commission, still could,” Citi analyst Mark May cautioned.
READ: LIVE BLOG: Facebook CEO Zuckerberg answers questions in front of Congress: Day 2
May said that channel checks with two social marketing platforms suggest that growth in spend at Facebook remains "strong" and that the company's first-quarter revenue could meet consensus forecasts despite the "significant noise.”
For the quarter, analysts are looking for year-over-year earnings growth of 30% to US$1.36 per share. Revenue is expected to rise 42% on the same basis to US$11.41bln.
The real driver following the April 25 earnings report will be user growth (or lack thereof), daily active users and revenue guidance.
Recode poll shows trust problem
Adding insult to injury, Facebook is the least-trusted major tech company, according to a joint SurveyMonkey/Recode poll.
“Some 56 percent of Americans said they trusted Facebook least with their personal information out of all major tech companies,” according to the poll.
Respondents were asked to choose among Facebook, Amazon.com (NASDAQ:AMZN), Apple Inc. (NASDAQ: AAPL), Alphabet Inc. (NASDAQ:GOOGL), Microsoft Corp. (NASDAQ: MSFT), Netflix Inc. (NASDAQ: NFLX), Uber and other technology heavy hitters.