Last night the New York Times published a report highlighting that Facebook shared user’s personal data with Chinese smartphone makers including Huawei which has been at the center of the “national security threat” issue raised by the Trump administration surrounding crucial 5G technology and the ultimately led to the shutdown of the recent Broadcom/Qualcomm deal. According to the article, Huawei and Lenovo, Oppo, and TCL were given private user access by Facebook through a long standing agreement. This article is on the heels of another report earlier this week discussing Facebook’s partnership with Amazon, Apple, Blackberry, and Samsung. Facebook has now said it will “wind down” the Huawei deal by the end of this week in response to this report. Importantly, Facebook said the data shared with Huawei stayed on the phones, and not the company’s servers, a very important distinction that will be front and center as Facebook and Zuckerberg navigate this new data issue that will certainly be a focus in the Beltway over the coming weeks/months as they further analyze this data issue and the nature of the partnership along with the post Cambridge strategy. With Zuckerberg and Facebook navigating the Cambridge crisis thus far over the last few months with flying colors in its testimony at the Beltway and Brussels, along with GDPR compliance and instituting privacy/data content enhancements to its platform that have caused minimal speed bumps with users and advertisers, the last thing investors wanted to see this morning is a new Chinese data content/privacy issue come to light especially in the heat of the current political climate and negotiations between the US and China. Facebook, Zuckerberg and the Street ultimately knew more data privacy and partnerships were going to come out post the Cambridge debacle, however the sensitivity of data partnerships with Huawei will add fuel to the fire of those in the Beltway looking to dig deeper into Facebook’s data situation. While the jury is still out on this Chinese data partnership news, we could see a negative reaction from the Street this morning as news is digested and fears of more headwinds for Zuckerberg & Co. could be on the horizon in the Beltway. That said, shares have shown a snap back recovery since the Cambridge issue broke as the damage to the company’s $50 billion advertising kingdom and 2 billion+ users has been very contained thus far in our opinion. We maintain our Highly Attractive rating and $225 price target on Facebook.