Facebook Is Taking Heat Over Covid-19 Misinformation. Why the Stock Is Rising.

The back story: On Aug. 18, Facebook released its first report on the content most viewed by its U.S. members. The results, covering the second quarter, included posts with memes, music, and recipes, among other things. Executives hailed the disclosure as part of the company’s effort to be the most transparent platform on the internet.

But days later, the New York Times reported that Facebook had shelved the first-quarter version of the report, which painted a different picture. That version said the most-viewed link for the first three months of the year was an article containing Covid-19 misinformation about a supposed vaccine-related death. Facebook’s policy communications director Andy Stone published the withheld report on Saturday.

The White House under President Joe Biden has become increasingly frustrated with Facebook’s perceived role in the spread of misinformation related to the Covid-19 pandemic. Last month, Biden said Facebook was “killing people” by allowing the spread of misinformation, though he later walked the comment back.

What happened next: On Monday, Axios reported that White House spokesman Michael Gwin took Facebook to task over its failure to publish the first-quarter content-viewing report. “Facebook still refuses to be straightforward about how much misinformation is circulating—and being actively promoted—on their platform,” Gwin said, according to Axios.

The company didn’t immediately respond to a request for comment from Barron’s.

Gwin wasn’t the only administration official to take aim at Facebook. On Sunday, during CNN’s State of the Union, Surgeon General Dr. Vivek Murthy criticized social-media companies for spreading misinformation quickly, and at a large scale. He has done the same earlier this year, arguing that current efforts to clamp down on misinformation aren’t sufficient.

“These are things that companies can and must change. And I think they have a moral responsibility to do so quickly and transparently,” he said.

Looking ahead: Investors haven’t responded to the latest Facebook controversy. They typically don’t, unless an issue threatens to push people off the platform or cut into revenue. Even fines in the billions of dollars don’t seem to have raised concerns.

According to a Barron’s check, the weekend controversy didn’t prompt any sell-side analysts to change their stances on the stock. Of the 47 analysts that cover Facebook, 81% rate it a Buy, while 17% rate the stock a Hold. There is a single Sell rating.

Investors may be more concerned with finance chief David Wehner’s warnings about the company’s revenue for the second half. On a call with investors to discuss the second-quarter earnings, the CFO said growth would slow, and that changes Apple (AAPL) made in April to prevent developers from tracking people across apps they don’t make, may have a larger impact in the third quarter.