NEW YORK (TheStreet) -- Facebook (FB) announced Monday that fake news sites are not allowed to use Facebook Audience Network, as the company faces scrutiny for its role in spreading fake news leading up to last week's presidential election. The ban already applied to misleading or illegal content.
This move will not have much of an impact from a financial standpoint, Cantor Fitzgerald analyst Youssef Squali said on CNBC's "Closing Bell" on Tuesday afternoon. The firm has a "buy" rating and $170 price target on the stock.
"This is a company that for the first nine months of the year, grew north of 50% with a huge margin north of 60%," he noted. "So we think it may have less than 1% impact on the top line and maybe on the bottom line. So we think the impact is really going to be the minimal."
While from a PR standpoint, this is "clearly not a great thing," Facebook is doing the right thing, Squali claimed. The perpetrators of the fake news problem are only after money, if Facebook can eliminate the incentive then that's a good thing.
"It's really like shrinkage in the supermarket," he noted. "You're always going to have a little bit of it. The question is, is it 2% or a fraction of 1%? We are hoping that it is the latter."
The fake news problem is not limited to Facebook either, Squali said. "This is an Internet issue."
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Separately, 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.
TheStreet Ratings team rates Facebook as a Buy with a ratings score of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that the team rates.
You can view the full analysis from the report here: FBFB data by YCharts