Facebook Rallies as German Watchdog Probe WhatsApp Data Sharing

The stock of Facebook Inc. (NASDAQ: FB) were edging higher during early morning trading hours o  Tuesday regardless of the fact that a German privacy regulator ordered the corporation to terminate the gathering and keeping of data from the users of the messaging application WhatsApp in the country.

Additionally, the Hamburg Commissioner for Data Protection and Freedom of Information stated that it also mandated the social networking giant to delete any info that it has already gathered from the mentioned application.

Facebook Inc. acquired the messaging application WhatsApp in a cash and stock deal amounting to $19 billion two years ago. The German privacy watchdog pointed out that the firm has since publicly ensured that information would not be shared between the two entities.

The privacy regulator asserted that the social networking company is breaching data protection law in the country and has not obtained the proper approval from the users of WhsatsApp.

According to recent data, the messaging application has over 35 million active users in Germany.

We have objectively rated the FB stock as a Buy based on its risk-adjusted total return potential within a period of 12 months. We did not give a rating based on this report or on the news in any particular day.

The primary reason we have given this rating is because we believe that the social networking company’s strengths outweigh its weaknesses. Some of the strong points shown by Facebook include its generally strong financial position, solid growth in terms of revenues, reasonable levels of debt by majority of the measures, attractive net income growth, exceptional record of growth when it comes to its earnings per share, as well as its growing profit margins.

Meanwhile, the major weakness that Facebook has shown is the fact that it is trading at a premium valuation according to our review of its present price in comparison to such things as book value and earnings.

As of 10:16 AM GMT -4 on September 27, the FB stock is changing hands at $128.26, up by 0.75 percent or 0.96 points. The social networking giant’s market capitalization currently posts at 362.54 billion, while its P/E ratio clocks in at 61.44.

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