Facebook’s future growth market may be outside the US

Susana Bates | AFP | Getty Images

Indian Prime Minister Narendra Modi (L) and Facebook CEO Mark Zuckerberg attend a town hall meeting at Facebook headquarters in Menlo Park, California in September 2015.

Overall, whether in the developed or developing world, consumers are showing few signs of being very bothered by the fallout from Cambridge Analytica, Ives said. He expects the damage to the company’s revenue to be no more than 3 percent, well below the 42 percent year-over-year gain analysts have been expecting when Facebook reports its first quarter, based on surveys in which 15 percent of users say they will use Facebook less because of the privacy issue.

Studies by both market researcher LinkFolio and Ives’ firm show that very few consumers are actually cancelling their Facebook accounts, despite the recent popularity of the #deletefacebook hashtag.

LinkFolio found that only about 20,000 more users than normal have said on Twitter that they ended their Facebook relationship, and GBH’s surveys show that cancellations have been “negligible,” according to Ives. Facebook reported more than 2.1 billion monthly average users in the fourth quarter.

“It’s not a meaningful hit,” said LinkFolio founder Andy Swan. “With Facebook, there’s no clear alternative the way there was with Uber [last year, when #deleteUber trended on Twitter, as critics urged users to switch to rival Lyft]. For Facebook, the alternative is Instagram, which they also own.”

Zuckerberg said under questioning that account deletions have not been meaningful.

The controversy has taken a big bite out of Facebook shares, which have fallen from a year-to-date high above $190 to $164. RBC Capital Markets analyst Mark Mahaney said at 14 times earnings estimates, net of the company’s cash, the shares are very cheap for a company whose earnings are expected to grow 30 percent annually.

“The 19 percent pullback in FB shares has created a compelling entry point for what is one of tech’s best growth stories,” Mahaney said in a note to clients on Friday. “Our advertiser survey highlighted record-high levels of budget allocation and leading ROI.”

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