Can Mark Zuckerberg assure investors -- and Congress -- that Facebook is going to make some big changes?
Wall Street has punished Facebook's stock since the Cambridge Analytica data scandal. Facebook is down nearly 10% this year.
Meanwhile. Amazon is up more than 20% in 2018. Apple is up 2%. Netflix has soared 50% and Google owner Alphabet is down just 1%.
Facebook's lackluster stock performance is one reason why it will be crucial for Zuckerberg to put on a charm offensive in Washington. Zuckerberg will testify in front of the Senate Judiciary and Commerce committees Tuesday about how data company Cambridge Analytica was able to access personal information belonging to about 87 million Facebook users. He will appear again before the House Energy and Commerce Committee on Wednesday.
Zuckerberg isn't known as a gifted public speaker. If Zuckerberg bombs on Capitol Hill, investors will worry that Congress could impose regulations on Facebook. Wall Street may even question whether Zuckerberg is the right person to run the company during these tumultuous times.
In the meantime, Zuckerberg is trying to soothe investors' fears. He told reporters in a conference call last week that the #DeleteFacebook movement didn't catch on: Few customers and advertisers left Facebook since the Cambridge problems came to light.
Analysts back those claims up. Brent Thill of Jefferies wrote in a report Sunday that Facebook users appear to be just as engaged on the site in the past few weeks as they were before all the negative headlines. Thill said in his report that his team surveyed 750 Facebook users and found that more than 60% said they were using Facebook just as often or even more than they were a year ago.
Thill also highlighted data from web traffic analytics firm SimilarWeb, which showed that Android users of Facebook actually spent more time on Facebook this past March than they did in March 2017.
"Recent headlines around FB's data policies have not meaningfully impacted engagement on the platform," Thill wrote.
And Mizuho analyst James Lee said in a report Friday that Facebook's recent decision to wind down the Partner Categories tool, which allowed advertisers to target users based on information harvested by third-party data brokers, will be a plus.
"FB is trying to improve data privacy/transparency," Lee wrote, adding that the new policy should not lead to any significant changes in how much advertisers spend on Facebook in the long haul.
The rest of Wall Street doesn't seem too nervous either. Analysts have boosted their first quarter earnings estimates for Facebook by more than 10% on average in the past three months. They've raised their forecasts for the full year by nearly 10% as well.
Wall Street won't have to wait much longer to find out if this bullishness was justified. After Zuckerberg's testimony in DC this week, the next can't-miss event for Facebook investors is April 25 after the market closes.
That's when Facebook will report its first quarter results and Zuckerberg and Facebook chief operating officer Sheryl Sandberg will face questions from analysts about the real impact Cambridge Analytica is having on user growth and ad sales.