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Facebook Inc (FB) Stock Will Slide Right Past This Problem

The fake news controversy won't put a dent in Facebook stock

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Facebook Inc (NASDAQ:FB) has been in the hot seat since the election to say the least. Pizzagate perhaps represented the pinnacle of the fake news controversy. Luckily, it ended with with no one killed. The question for Facebook stock holders, though, is whether it’s just as lucky (from an investment standpoint) that the company has now decided to crack down on fake news.

The potential problem with the decision is the alienation of conservative users. The process for policing fake news, in a nutshell, is as follows: Users can flag stories they think might be fake, causing the stories in question to be sent to fact checkers from legitimate organizations like The Associated Press and The Washington Post.

FB cited easier reporting and the labeling of disputed stories as two of four pieces of its crackdown.

The other two: “informed sharing,” which includes “testing” a ranking system that downgrades articles which are shared less after being read, and “disrupting financial incentives for spammers.” But it’s the third-party fact checking that’s arguably the problem for the company and possibly Facebook stock.

Is Fake News Really a Problem for FB?

Conservatives who have long mistrusted mainstream media could also mistrust the neutrality of such organizations, which many label as liberal-leaning. Even members of the mainstream media have cited problems with the site’s attempts to curate Truth with a capital T.

For Facebook stock investors, though, I believe there is little to worry about. The conversation surrounding FB right now is not — at least not yet — directly relevant to the stock. Instead, it’s a reflection of a philosophical debate around information sharing and policing. It’s a reflection of questions we as a country have about the media’s role in society and politics. The fact that FB is at the center of these questions isn’t a red flag for the company; it actually reinforces its relevance.

And even if conservative users don’t trust the news feed’s fact checking, it’s unlikely that they will be distrustful enough to actually deactivate their accounts. They may find other avenues for getting their news, in theory, but as long as they’re on Facebook for other reasons — like staying in touch with friends — they will be giving the company and, in turn, its advertisers the eyeballs that drive revenue. And quite frankly, that’s all that really matters on Wall Street.

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Article printed from InvestorPlace Media, http://investorplace.com/2016/12/facebook-inc-fb-stock-slide-past-problem/.

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