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Facebook (FB) Reportedly Tests Things In Common Feature

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Facebook (FB - Free Report) is reportedly working on a feature named Things In Common that will let strangers connect with each other on the basis of shared interests.

The feature will enable public discussion forums on the platform to become more effective as it will get people from the same locality or educational institutions connected, with the common information between two participants highlighted. As a test feature, it is only available for a few users in the United States currently.

It will be interesting to find out how users react to the new feature as the company is trying to regain the trust of users after the data privacy scandal that surfaced in mid-March. Notably, the incident had impacted almost 87 million users.

However, keeping in mind the recent privacy issues that have put the company in a spot, the information available under this tab will be limited to what is available for public use. Any data that the user has chosen to share with their friends’ circle will not be displayed.

Hence, we believe, this feature might be accepted by users as no private data will be revealed. But, at the same time, users will get to know about random people with shared interests, which help to create a stronger community.

The upgrades and addition of features might boost the share momentum of the company. Notably, the company’s stock has lost 1% on a year-to-date basis compared with the industry’s decline of 5%.

Facebook Struggling to Overcome Data Privacy Scandal

Notably, the growth rate significantly slowed down in second-quarter 2018 compared with the first-quarter figure

Monthly active users (MAUs) in the second-quarter were up 228 million on a year-over-year basis and 38 million sequentially to 2.23 billion. However, the figure lagged the Zacks Consensus Estimate of 2.25 billion. The company lost daily active users in Europe on a sequential basis due to the negative impact of General Data Protection Regulation (GDPR).

In the first quarter, Facebook MAUs increased 260 million year over year and 67 million sequentially.

Additionally, dismal guidance also remains a concern. For the second half of 2018, the company expects revenue growth rates to decline. On a sequential basis, in both third and fourth quarters, revenue growth rates are expected to decline in high-single digit percentages.

Facebook expects expenses to increase at a faster rate compared to revenues in 2019. Heavy spending in areas like safety & security, augmented reality/virtual reality (AR/VR), marketing, and content acquisition is expected to hurt profitability in the near to mid-term for this Zacks Rank #5 (Strong Sell) stock.

Stocks to Consider

A few better-ranked stocks in the same industry include Match Group, Inc. (MTCH - Free Report) , Angie's List, Inc. (ANGI - Free Report) and Exp World Holdings, Inc. (EXPI - Free Report) , all with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Match Group, Angie's List and Exp World Holdings is projected to be 12.5%, 25% and 10%, respectively.

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