Homepage / Technology / Facebook's stock is tanking — but Wall Street analysts aren't too worried, for now
Amazon says this Prime Day was its biggest shopping event ever Kudlow says President Trump is 'so dissatisfied' with China trade talks that he is keeping the pressure on As stocks regain their footing, an ominous warning looms Goldman Sachs downgrades Clorox to sell, says valuation is 'unsustainably high' How Satya Nadella has spurred a tripling of Microsoft's stock price in just over four years Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming The one chart that explains Netflix’s stunning comeback US housing starts plunge 12% in June to a nine-month low Aerospace titans Boeing and Airbus top $110 billion in orders at Farnborough Target uses Prime Day to its advantage, logging its 'biggest online shopping day' so far this year Billionaire Marc Lasry sees bitcoin reaching up to $40,000 as it becomes more mainstream and easier to trade These are the 10 US airports where you're most likely to be hacked Amazon shares slightly higher as investors await Prime Day results Wreck of Russian warship found, believed to hold gold worth $130 billion A bullish ‘phenomenon’ in bond market is weeks away from fading, top credit strategist says Stocks making the biggest moves premarket: MS, GOOGL, TXN, UAL, NFLX & more Twitter shares up 50% since late April means most upside priced in, analyst says in downgrade EU fines Google $5 billion over Android antitrust abuse Mortgage applications fall 2.5% as buyers struggle to find affordable homes America may not have the tools to counter the next financial crisis, warn Bernanke, Geithner and Paulson Investors are getting spooked as the risk of a no-deal Brexit rises EU expected to fine Google $5 billion over Android antitrust abuse Ex-FBI chief James Comey urges Americans to vote for Democrats in midterm elections Elon Musk apologizes to British cave diver following baseless 'pedo guy' claim Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement The trade war is complicating China's efforts to fix its economy European markets set for a strong open amid earnings; Google in focus Hedge fund billionaire Einhorn places sixth in major poker tournament The biggest spender of political ads on Facebook? President Trump Asian stocks poised to gain after Fed's Powell gives upbeat comments; dollar firmer Stocks are setting up to break to new highs Not all FAANG stocks are created equal EU ruling may be too little, too late to stop Google's mobile dominance Cramer explains how Netflix's stock managed to taper its drop after disappointing on earnings Airbnb condemns New York City's 'bellhop politics,' threatens legal retaliation Amazon sellers say they were unfairly suspended right before Prime Day, and now have two bad choices Investor explains why 'duller' tech stocks can have better returns than 'high-flying' tech names Elon Musk is 'thin-skinned and short-tempered,' says tech VC Texas Instruments CEO Brian Crutcher resigns for violating code of conduct Google Cloud Platform fixes issues that took down Spotify, Snapchat and other popular sites Uber exec: We want to become the 'one stop' transportation app 'What a dumb hearing,' says Democrat as Congress grills tech companies on conservative bias Amazon shares rebound, report says Prime Day sales jumped 89 percent in first 12 hours of the event How to put your medical history on your iPhone in less than 5 minutes Investment chief: Watch these two big events in 2018 Even with Netflix slowing, the market rally is likely not over Cramer: Netflix subscriber weakness debunks the 'sky's the limit' theory on the stock Netflix is looking at watch time as a new area of growth, but the competition is stiff Why Nobel laureate Richard Thaler follows Warren Buffett's advice to avoid bitcoin Rolls-Royce is developing tiny 'cockroach' robots to crawl in and fix airplane engines After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group Roku shares rise after analyst raises streaming video company's price target due to customer growth China is investing 9 times more into Europe than into North America, report reveals Amazon says US Prime Day sales 'so far bigger than ever' as glitch is resolved Netflix is on pace for its worst day in two years US lumber producers see huge opportunity, rush to expand San Francisco to consider tax on companies to help homeless Homebuilder sentiment, still high, stalls as tariffs, labor and land drive up costs Powell backs more rate hikes as economy growing 'considerably stronger' Netflix history is filled with big stock declines – like today – followed by bigger rebounds Intel shares get downgraded by Evercore ISI due to rising competition from Nvidia, AMD Petco aims to reinvent the pet store with something you can't buy online Genetic testing is coming of age, but for consumers it's buyer beware Tech 'FAANG' was the most-crowded trade in the world heading into the Netflix implosion, survey shows Netflix weak subscriber growth may indicate a 'maturity wall' that could whack the stock even more: Analyst This chart may be predicting the bull market's demise Wall Street says Netflix's stock plunge is a ‘compelling’ buying opportunity because the streaming giant ‘never misses twice’ Tesla sinks after Musk tweets, again Boeing announces new division devoted to flying taxis Stocks making the biggest move premarket: NFLX, UNH, GS, AMZN, WMT & more Deutsche Bank downgrades Netflix, but says big subscriber miss is not 'thesis changing' IBM is experimenting with a cryptocurrency that’s pegged to the US dollar North Korea and Zimbabwe: A friendship explained Virgin Galactic spinoff Orbit to launch rockets from the UK with space deal Artificial intelligence will create more jobs than it destroys? That’s what PwC says ‘Treasonous’ Trump and ‘Putin’s poodle:' Scathing headlines follow the Trump-Putin summit China’s fintech companies offer ‘enormous’ opportunity, investment manager says Trump's performance at summit with Putin was 'unprecedented,' experts say Walmart and Microsoft link up on cloud technology as they both battle Amazon European stocks seen mixed amid earnings; Fed’s Powell to address Congress How I knew I should quit my day job and run my start-up full-time: Viral website founder China's stocks have been trounced, but the trade war may ultimately be good news for those shares Billionaire tech investor Peter Thiel bets on crypto start-up Block.one Asian shares subdued open after mixed close on Wall Street; energy stocks under pressure Amazon cloud hits snags after Amazon Prime Day downtime Netflix isn't doomed by one quarter unless people start questioning the long-term investor thesis Tech stocks set to sink on Tuesday after rough evening for ‘FANG’ Netflix plummets after missing big on subscriber growth This wristband lets humans control machines with their minds The U.S. has a rocky history convincing Russia to extradite computer criminals Amazon suffers glitches at the start of Prime Day Jeff Bezos is now the richest man in modern history 'The United States has been foolish': Read Trump and Putin's full exchange Goldman Sachs recommends these 5 highly profitable companies — including Nvidia — to combat rising inflation Goldman Sachs releases 'tactical' stock picks for this earnings season Three red flags for Netflix ahead of its earnings report The bond market may be raising recession fears, but don't expect one anytime soon Cramer: Banks are 'making fortunes' but are still as hated as they were during the financial crisis Putin told Trump at summit: Russia never meddled in US election

Technology

Facebook's stock is tanking — but Wall Street analysts aren't too worried, for now

Changes at Facebook will only cause short-lived pain for the company, Wall Street analysts said on Friday — even though traders were dumping shares.

Shares of Facebook dropped more than 4 percent on Friday on the heels of an announcement from CEO Mark Zuckerberg. Facebook’s newsfeed will continue to shift toward favoring content from people, rather than publishers, Zuckerberg said — even if “some measures of engagement will go down.”

Despite the stock’s clear decline, reactions among analysts were more positive, if still lukewarm — most analysts listed in FactSet raised their price targets for company’s next earnings report, and the outlook for coming quarters was a mix of upgrades, downgrades and unchanged expectations.

Confused? You’re not alone. Analysts across the industry had both good and bad things to say about the changes. Stifel analyst Scott Devitt abruptly changed his view for Facebook over the past 24 hours, reiterating his buy rating just after midnight Friday, only to downgrade his rating to hold around 9 a.m. EST.

Here’s what other analysts had to say:

Piper Jaffray’s Samuel Kemp: “We see this as the right long-term decision.”

When people are selling the stock, they’re thinking: “This could lead to reduced Facebook engagement, ad impressions and therefore ad revenue,” according to Kemp.

But Facebook still owns Instagram, and that could absorb any ads that don’t find a home on Facebook’s main product, Kemp wrote. Plus, Facebook has proven its ability to charge more for ads in the past.

Overall, Kemp wrote that he didn’t see enough evidence of advertising impacts to change his long-term view of the company. Indeed, the changes could combat user attrition over time by making the product more pleasant, he theorized.

“We see this as the right long-term decision for the platform and, over the near-term, doubt that this will have a material impact on revenue,” Kemp wrote.

Brian Nowak, Morgan Stanley: Be cautious, there are “just as many unknowns vs. knowns.”

Nowak urged caution in his note, writing that there were “just as many unknowns vs. knowns” about the company’s future.

While Zuckerberg’s post “injects incremental near-term uncertainty,” Nowak noted that the overall trend toward “societal interaction” has been pretty consistent since mid-2017. Facebook may even have already been testing these changes over the past year, he said.

Given Facebook’s growth on other platforms, like Instagram, Nowak maintained that the stock wasn’t expensive.

Brian Wieser, Pivotal Research Group: “[W]e think the actions the company will take pose a headwind to growth.”

Wieser is a rare Facebook bear, and maintained his “sell” rating on Facebook shares on Friday. But that’s not necessarily due to the changes announced by Zuckerberg, he wrote.

“In short, we think the actions the company will take pose a headwind to growth for the business in the near-term,” Wieser said. “However, we also think that the actions taken will be helpful for the long-term health of the overall business.

Instead, Wieser said he is tracking Nielsen data showing that indicate Facebook usage was already falling prior to this announcement, “if from very high levels.” The decline was slight, but Wieser noted that Facebook may actually address the root of that decline by cracking down on concerns like so-called fake news.

Wieser also said that Facebook has plenty of other near-term challenges, such as swelling content costs, regulation, and changes in ad policies and metrics.

Justin Post, BofA Merrill Lynch: Keep an eye out for engagement numbers.

Even if Facebook users spend less time on the platform, Post noted that it will be tough for investors to know.

“Facebook has not disclosed an average daily time spent metric in several quarters and visibility is limited to management disclosure,” Post wrote. “The metric question is if Facebook will see lower daily usage from the change, which would show up in reported daily active users (DAUs)…..We think some investors will view this as the “right” move for the long-term health of Facebook, but management may need to better outline drivers of core Facebook time spent from here.”

Post said that his checks on fourth-quarter Facebook advertising have been positive, and said that Facebook’s new video platform, Watch, could prove a new opportunity for publishers and advertisers.

But, he noted, “Watch still needs a hit ‘viral’ show to really get users attention, in our view.”

Scott Kessler, equity analyst at CFRA Research: Bad short term, but good for “brand value.”

“FB is prioritizing quality over quantity in terms of content and advertising, which we think could have a negative impact on revenue, especially over the nearer term. However, we see these changes as constructive for brand value,” Kessler wrote.

Daniel Ives, head of technology research at GBH Insights: It’s still a global growth story.

Ives said he is not worried because Facebook has “strong monetization tailwinds” in 2018, thanks to its massive monthly active user (MAU) base.

“Facebook will continue to grow its massive global installed base in our opinion while importantly monetizing users especially on the Instagram side of the house, which remains the ‘core 1-2 punch’ that underlies our bullish thesis on the name,” Ives said in a note released late Thursday.

Ives raised his price target from $210 to $225 — a nearly 20 percent increase from Thursday’s close.

— CNBC’s Arjun Kharpal contributed to this report.

Source: Tech CNBC
Facebook's stock is tanking — but Wall Street analysts aren't too worried, for now

Comments are closed.