Facebook's Biggest Bull Sees Privacy Pivot as Move Against Snap

(Bloomberg) -- Facebook Inc.’s newfound focus on encrypted and ephemeral communication is less about protecting user privacy than it is about gaining ground against some of its biggest messaging competitors, according to an analyst who called the move “a huge opportunity.”

“Right now, the company that controls private messaging or one-to-one messaging is primarily iMessage or Snapchat, depending on your age,” said Richard Greenfield, an analyst at BTIG, referring to products from Apple and Snap, respectively. “Yesterday’s announcement was a real signal that Facebook plans to be more aggressive in dominating messaging.”

Greenfield has a buy rating on Facebook shares, along with a $275 price target that stands as the highest on Wall Street, according to Bloomberg data.

“The dominant messaging platform is not Facebook,” Greenfield said in a phone interview, though he noted that the company’s WhatsApp business was popular outside the U.S. “Right now you have to leave the Facebook ecosystem to send a text message, and [CEO Mark Zuckerberg] wants to capture more of your time, not less. He’s trying to capture your time from other companies, not cannibalize it from his own platforms.”

Facebook shares fell 1.5 percent on Thursday, but are coming off a four-day rally that took them to their highest level since August. While the stock is more than 20 percent below record levels, it has risen nearly 40 percent from a December low.

Shares of Snap -- whose Snapchat social network was built around privacy and messages that automatically disappear -- fell 3 percent on Thursday, building on a 2.1 percent decline in Wednesday’s session.

The pivot isn’t “about driving revenue so much as it is keeping you in the ecosystem rather than your using other platforms,” Greenfield said. “There’s a war for consumer time and Facebook wants more of yours.”

Currently, 40 firms have a buy rating on Facebook, according to Bloomberg data. Ten rate the company a hold, while just two have a sell rating. The average price target is $195.

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm, Jeran Wittenstein

©2019 Bloomberg L.P.