Recode's Lee Discusses Risk of Social Media Stocks on CNBC
NEW YORK (TheStreet) -- As a number of social media stocks are heading lower today, Recode Managing Director Ed Lee discussed what to look for when assessing growth at companies like Facebook (FB) - Get Report and Twitter (TWTR) on CNBC's "Squawk Alley" Tuesday.
Recode is an independent technology news organization.
"When it comes to Facebook and Snapchat, I think the thing to be aware of, which we tend to overlook, is what is their product exactly? What is Facebook's product? It's people posting things and that's a hard thing to control ultimately," Lee said.
The factor that could really end up hurting Facebook is that the social media giant has to protect its product which is people, he explained.
"We saw over the weekend, the Israeli government blasted Facebook for having all these posts on the website that incited violence. Facebook doesn't take them down because they determine what's hateful, what's not hateful. Facebook is acting as a super natural government on its own largely to protect its product which is people saying things on the network," Lee noted.
The necessity of social media companies to protect freedom of speech rights for users is a "definite risk factor" for them all, Lee added.
Shares of Facebook are falling by 0.82% to $113.25 midday Tuesday.
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Separately, TheStreet Ratings rated Facebook as a "buy" with a score of A-.
This is based on the convergence of positive investment measures, which can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins.
TheStreet Ratings feels its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
You can view the full analysis from the report here: FB
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.