Facebook reports first-quarter earnings Wednesday after the closing bell.Regulation and limits to global digital advertising growth are core components to Pivotal Research analyst Brian Wieser's bear case for Facebook.Facebook is down more than 3% ahead of the earnings report.Facebook faces considerable risk on two serious fronts, according to one of the most bearish Wall Street street analysts covering the stock: regulation, and the plateauing digital-advertising market.The social media company will report first-quarter earnings after closing bell Wednesday. Wall Street expects adjusted earnings-per-share of $1.62 on revenue of $11.41 billion. That would be EPS growth of 19.6% year-over-year, and revenue growth of 42.1% year-over-year. Wall Street's price target is $215.67 a share, and there are 42 'buy' ratings, with only 2 'sell' ratings.Brian Wieser of Pivotal Research is one of those 'sell' ratings with a price target of $138about 13% below the stock's current level. In a recent telephone conversation and research note, he outlined his concerns about both increased regulation and digital ads.RegulationThe EU regulation known as GDPR, set to be implemented on May 25th, is "going to have a negative impact on the market as a whole," Wieser told Business Insider. The regulation specifies how EU citizens' data can be used by companies, introducing strict new rules around gaining people's consent to process their data.The rules could restrict ad spending, and that could makeadvertisers uneasy about how to market on the platform."It's the uncertainty that's the bigger problem," he said, adding that "they don't know what they have to do to be compliant." He added that "most advertisers are not ready for GDPR."The GDPR rules will also require advertisers to get consent from users to use their personal data. If the user chooses not to 'opt-in,' the advertiser can only use non-personal data. "Who's going to opt-in for that'" Wieser said. Facebook's custom audiences tool for advertisers relies on users opting in, and Wieser estimates that it accounts for one-quarter of Facebook's revenue. Wieser wrote in a recent note that "these issues could prove to be the catalyst that causes deceleration in growth of digital advertising."Wieser also believes that the Federal Trade Commission poses a risk to Facebook in the wake of revelations that it allowed user data to be mined by outsiders such as Cambridge Analytica."US Federal Trade Commission and European regulators will look to fine Facebook in a meaningful way because of the Cambridge Analytica episode," he wrote in the note. And while the FTC poses a risk only in the form of a fine, Wieser still sees that as a minor risk.Digital AdsWieser also thinks that the global digital advertising market is bound to slow down. "I think the entire market will decelerate," he told Business Insider, noting that "economic growth correlates strongly with advertising growth."So in the case of Facebook's revenue growth, "we're talking about a single-digit difference," he said. "From an investor perspective, it's meaningless."Facebook is down 12% on the year.SEE ALSO:The dollar's getting stronger ' and that could be bad newsJoin the conversation about this storyNOW WATCH: Wall Street's biggest bull explains why trade war fears are way overblown
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