Facebook (FB) Stock Declining as 'Moments' App Not Offered in Europe

NEW YORK (TheStreet) -- Shares of Facebook (FB) are falling by 0.4% to $82.57 on Friday after the company's European policy chief Richard Allan said that the social network is not offering its new photo app 'Moments' in Europe due to facial recognition concerns, according to The Wall Street Journal.

Earlier this week, Facebook launched its 'Moments' app, which allows users to privately share photos with friends without posting them onto Facebook. The people in the photos are then identified through facial recognition technology, the company stated.

Regulators in Europe who are concerned about the technology said that the social network must develop a way for users to opt-into its facial recognition feature, the Journal noted.

"We don't have an opt-in mechanism so it is turned off until we develop one," Allan said.

Additionally, nine privacy organizations including the American Civil Liberties Union and the Electronic Frontier Foundation withdrew earlier in the week from the talks with U.S. government agencies aimed at a "code of conduct" around facial recognition technology, the Journal reported.

"At a base minimum, people should be able to walk down a public street without fear that companies they've never heard of are tracking their every movement and identifying them by name," the group said in a joint statement.

Separately, TheStreet Ratings team rates FACEBOOK INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate FACEBOOK INC (FB) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 41.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • FB's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.97, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for FACEBOOK INC is currently very high, coming in at 94.44%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 14.45% trails the industry average.
  • Net operating cash flow has increased to $1,700.00 million or 32.29% when compared to the same quarter last year. Despite an increase in cash flow, FACEBOOK INC's average is still marginally south of the industry average growth rate of 41.44%.
  • FACEBOOK INC's earnings per share declined by 28.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FACEBOOK INC increased its bottom line by earning $1.10 versus $0.59 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.10).
  • You can view the full analysis from the report here: FB Ratings Report

If you liked this article you might like

Watch: Facebook Co-Founder Chris Hughes on How to Solve 'Fake News'

Watch: Facebook Co-Founder Chris Hughes on How to Solve 'Fake News'

Snap's Stock Tanks as Online Campaign Against Snapchat Redesign Spreads

Snap's Stock Tanks as Online Campaign Against Snapchat Redesign Spreads

Using Twitter to Trade Stocks

Using Twitter to Trade Stocks

Buy Stocks That Are Right for You: Cramer's 'Mad Money' Recap (Friday 2/16/18)

Buy Stocks That Are Right for You: Cramer's 'Mad Money' Recap (Friday 2/16/18)

How Jim Cramer Knew to Sell Just Before The Dow Jones Industrial Average Tanked

How Jim Cramer Knew to Sell Just Before The Dow Jones Industrial Average Tanked