Apple’s changes affect Facebook’s actions. Concern is likely to be exceeded.

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they may not look like rivals at first glance. Apple’s large cash deposit comes from its successful iPhones and Facebook, after all, creates social networking apps.

But they are rivals, at least according to Facebook CEO Mark Zuckerberg, who pointed this out during the company’s quarterly earnings conference in January. He exposed Facebook’s concerns (ticker: FB) over Apple’s (AAPL) control over iOS software that feeds its mobile devices.

Beyond competing in messaging apps (Apple has iMessage and Facebook creates WhatsApp and Messenger), Facebook has also had issues with an upcoming switch to iOS that will make Facebook harder to target ads. In theory, at least, that would make them less valuable.

The technology, called advertiser identifier or IDFA, allows application developers like Facebook to track people’s activity. Now people have to turn it off if they don’t want their activity tracked. Apple plans to change that in the coming weeks, avoiding tracking unless people opt in, and Facebook doesn’t like it very much.

The changes to iOS were supposed to be implemented last year, but Apple postponed them until 2021. Among other factors, the potential impact of IDFA has weighed on Facebook’s share price, which has fallen a 2.3% in the last six months, compared to

S&P 500

gain of 15% of the index.

James Cordwell, an analyst at Atlantic Equities, wrote in a customer note on Monday that investors have already taken into account the IDFA change in stock prices and that there is still plenty of room to expand the company. Cordwell acknowledged there would be short-term uncertainty for Facebook and some damage to revenue. However, in the long run, the switch from Apple to IDFA could strengthen Facebook’s business.

“The likely degradation of targeting / measurement across the“ open ”iOS / App Store ecosystem will increase the appeal of“ closed ”content platforms for advertisers and app developers, with Facebook better positioned to take advantage of this, given its investments in Shops and (to a lesser extent) Instant Games ”, wrote the analyst.

It is also possible for advertisers to simply accept a lower return on money spent on advertising because it would be difficult for many big brands and direct response advertisers to completely stop spending, Cordwell wrote. Apple’s changes will continue to allow Facebook to collect and use data about its members’ behavior within the limits of the app, suggesting that the company will continue to have useful profiles of its users that can be applied to ads.

Cordwell is also optimistic about Facebook for other reasons. In the note, he wrote that the company increased its active advertising base by more than 25% during the 2020 financial year, while saying that its store function, which offers the possibility of e-commerce, will generate more revenue in the second half of this year. Instagram’s Reels feature, meanwhile, offers the company a short-format video view popularized by services like Tik Tok, he said. And finally, he said, the company’s virtual and augmented reality efforts often have limited credit, despite the success of the company’s Quest headphones.

Cordwell values ​​Facebook shares overweight and has a goal of $ 345 for the share price. Facebook shares have gained 34% in the last year, as the S&P 500 index advanced 17%. Facebook closed the regular session Monday at 0.5%, to $ 260.33.

Write to Max A. Cherney at [email protected]