Facebook Inc (NASDAQ:FB) stock has risen more than 50% since the start of the year, but that doesn’t mean all is well for the tech giant.
Facing a record $5-billion fine from the SEC for its privacy-related issues surrounding the Cambridge Analytica scandal, the bar has been set for such breaches. And while that might not make a big dent for the company which earned more than $22 billion in 2018, the danger is that there could be stiffer penalties and more scrutiny in the future.
Data issues have not been new for Facebook and with a U.S. election a little more than a year away, 2020 could be an important year for the company. Not only will the election test how well the company is able to prevent fake news from penetrating its social media platform, but the results themselves could have a big impact on the company’s future. One Democratic candidate, Massachusetts Senator Elizabeth Warren, has talked about breaking up big tech companies like Amazon.com, Inc (NASDAQ:AMZN) and Facebook.
Whether or not it happens is anyone’s guess, but at the very minimum we could see a lot more oversight being required of Facebook in the future. And the problem is that’s going to come at a cost to the company which could drag down its profits in future years. That, combined with the risk that the company may not be out of the woods yet with respect to privacy breaches and you’ve got a situation where investing in Facebook may not be as appealing option as it once was.
