Facebook, Google cancel US-Hong Kong undersea data cable project

Google (GOOGL) and Facebook are no longer planning to construct an underseas cable to link the US and Hong Kong, reports Bloomberg- due to US government concerns that China might be able to collect data on Americans via the cable.

However following the removal of the application, Google and Facebook (FB) have now submitted a new proposal that doesn’t include Hong Kong’s Pacific Light Data Communication Co, and instead links to Taiwan and the Philippines, says the report.

According to Bloomberg, Pacific Light represented a key concern for US security agencies due to its connection with China’s Dr. Peng Telecom & Media Group Co.

Shares in Alphabet have surged 22% so far year-to-date, with social media giant Facebook up 43%. And both companies score a bullish Strong Buy Street consensus, based on analyst ratings from the last three months.

However, for FB, its $292 average analyst price target implies shares could pull back from current levels over the next few months.

Rosenblatt Securities analyst Mark Zgutowicz recently reiterated a Buy rating on the stock with a $325 price target (11% upside potential) as the social media platform is “paddling out to a big holiday wave”.

“While stimulus spend fatigue may soon set in, Facebook is well-aligned to the now everything e-commerce world and looks to be walking into a can’t miss holiday compare that perhaps only Apple IDFA [Identifier for Advertisers] could disrupt,” Zgutowicz told investors.

“Further, while potentially not as large as the first consumer stimulus, we suspect #2 will be in route preholiday spending, setting up a potentially big 4Q against an enticing compare.” (See Facebook stock analysis on TipRanks).

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