- I believe it is highly likely that the company's advertising problems (stemming from the revelation that Russia has posted fake advertisements/information) are being understated by Facebook.
- The Mueller investigation may uncover more issues with regard to advertising on Facebook.
- Facebook has previously said that they have deleted millions of fake accounts around the world. Facebook has even mentioned that some days they delete as many as 1 million fake accounts. Therefore, it stands to reason that Facebook may have uncovered only a small amount of false advertisements made by Russians and others.
- Though the amount of money being spent for advertising on Facebook is robust, at the very least an additional layer of expenses will be created.
If I am correct about these possible influences and despite the lax regulatory environment that exists today -- much like the FCC maintaining control of television and other media advertising -- Facebook and Alphabet's (GOOGL) - Get Alphabet Inc. Class A Report Google will likely face much more scrutiny in the months and years ahead. (More fake advertisements could be forthcoming).
This may represent a short term blow to (T)FAANG as well as the Nasdaq.
I expect the Nasdaq to underperform the other senior indices now.
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At the time of publication, Kass and/or his funds were long/short XXX, although holdings can change at any time.
Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.