Facebook has been subject to increasing pressure to provide more transparency

Published By: Ken Bock on December 29, 2016 08:15 am EST

Facebook Inc. (NASDAQ:FB) announced that it held recent talks with Media Rating Council (MRA) – marketing industry’s watchdog for media measurement methodology and research. According to Ad Age, the recent talks were regarding auditing the company’s metrics. Facebook shares, which have gained 11.71% year-to-date (YTD) through December 28, declined 0.92% during active trading on Wednesday.

Business Insider further reported that Facebook is currently facing increasing pressure to provide more transparency as it confessed on multiple occasions about its misreported metrics. The first confession from the company came in September, after which it issued key measurement update alongside creating a new blog dedicated to such metrics on its platform.

The company has so far confessed to overstating average duration of video viewed by about 60-80% during the last two years. It even overstated reach on posts made by pages by 33-50% alongside undercounting video completions, which analysts believe should be up 35%. Moreover, average time spent on instant articles was over stated by 7–8% while engagement on unpaid posts also came out incorrect due to duplication errors.

The report also suggests that the $339.11 billion company’s lack of accreditation by council has been a recent source of rising tension with the advertisers. Since it has not been accredited by MRC, Association of National Advertisers (ANA) believes that its metrics’ auditing remains incomplete. This could cost Facebook its advertising revenues, which remain a key source of its overall revenues.

Street analysts have given the social networking site consensus price target (PT) of $115.23, implying 32.77% upside potential over the previous closing price. Furthermore, out of 43 analysts covering the stock at Wall Street, 35 recommended it as Buy, four rated Overweight, three suggested Hold, while one analyst advised selling the shares.