Facebook is the 'biggest concern' among the FAANG stocks, analyst says

Key Points
  • Facebook has "broken trust on so many levels," says Ray Wang, principal analyst and founder at Silicon Valley-based Constellation Research.
  • Speaking about the woes faced by the social media giant, Wang said "some kind of management change" is required along with the bolstering of efforts to address concerns surrounding privacy and cybersecurity.
  • Wang also commented on Apple, a company he said "screwed up on prices" but had good longer term prospects.
Facebook is the 'biggest concern' among the FAANGs: Analyst

One industry analyst has sounded the alarm on Facebook, calling the company the "biggest concern" among the so-called FAANG stocks.

"The digital economy operates on trust, and they've broken trust on so many levels," Ray Wang, principal analyst and founder at Silicon Valley-based Constellation Research, told CNBC's "Squawk Box" on Monday.

The FAANG stocks consist of Silicon Valley tech giants Facebook, Amazon, Apple, Netflix and Google-parent Alphabet.

Wang said many of Facebook's trust woes have been "centralized" around Chief Operating Officer Sheryl Sandberg, who was in the spotlight after a New York Times report in mid-November about the executive and the social media company's internal operations.

The Times report came on the back of a series of scandals and incidents which have mired Facebook in controversy and sent its stock sinking in 2018. As of its last close, the company's stock price was more than 43 percent off its 52-week high.

Asked about the possibility of Sandberg departing from Facebook, Wang said it was "in the rumor category."

"I think there needs to be some kind of management change or some appointment that's someone that the market trusts to take care of these issues and to address privacy and cybersecurity in a stronger fashion than what's being done today," he said.

Apple 'screwed up on pricing'

Turning to another embattled Silicon Valley tech giant, Wang said Apple "screwed up on pricing."

In particular, Wang cited the challenges faced by Apple in India, where it "overpriced the product" and "missed the whole market" as a result.

Pointing to the other shortcomings of Apple, Wang said the company's artificial intelligence assistant, Siri, "still doesn't work," that they had "nothing to account for" the billions spent on the Maps product along with issues faced with the Apple Watch and the ECG function.

Furthermore, Wang added, the ongoing U.S.-China trade spat could have an impact on Apple. His comments echo those of a strategist who told CNBC last Friday that the tech giant is "at the forefront of vulnerability" in the ongoing conflict.

Faced with all those challenges, however, Wang remained positive on the company's prospects beyond the near futures.

"Overall, they've done a good job shifting from products to services revenue and I think that's going to pay off in the longer run," he said.