Patrick Armstrong, chief investment officer at Plurimi Investment Managers, has predicted that social media stocks will fall further as more details emerge about controversial data sharing practices.
“We think there’s another leg in the sell-off to come in the social media companies. There’s enough issues facing them right now that I don’t think people are going to pile in and buy the dip,” Armstrong told CNBC.
While Facebook is currently at the centre of the scandal, similar details are likely to emerge from Alphabet (Google) and other tech giants.
He anticipates that the scandals will not drastically alter the business model of said companies, and that long term disruption will be minimal.
It might make 2018 a good time for investors to buy reduced-price social media stock, therefore.
Much of the damage to the stock came in anticipation of tougher regulation, CNBC reports, with GDPR set to be implemented next month.
There are concerns over a ‘splinternet’, wherein different regions take different approaches to online regulation, presenting global companies with a major challenge.
“The internet advertising model is under attack and regulation itself is under attack.
“And I think you’ll see the ‘splinternet,’ which is our definition of the fragmentation of the internet all around the world, which in some jurisdictions like perhaps Europe, regulating the internet more than others like perhaps the U.S.,” says Cyrus Mewawalla, head of thematic research at GlobalData.
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