Analyst Note| Ali Mogharabi |
With the final races of the 2020 elections decided, our views regarding the potential impact of antitrust suits and legislative efforts against Alphabet and Facebook have not changed. We think the antitrust suits against both firms will ultimately be decided by the U.S. Supreme Court, which is likely to apply what’s known as the consumer welfare standard—benefiting Alphabet and Facebook. In addition, given the Democrats’ only slight advantage in the Senate, we do not expect large changes to the antitrust laws or to Section 230 of the Communications Decency Act, which offers immunity from liability for Internet content. However, regulations surrounding data, which have bipartisan support, are likely. We are maintaining our $1,980 and $306 fair value estimates of wide-moat Alphabet and Facebook, respectively. While both companies are trading at a discount to our fair value estimates, they remain 3-star stocks.