Can Facebook Stock Weather the Storm After Poor Earnings and Negative Press?
Facebook shares rose Monday following the tech giant’s earnings call, but fell sharply Tuesday. Stocks reached a low of $311.85 — a 5% drop — after opening just over $329. The stock dipped again Wednesday when the market opened, falling from $315.81 per share Tuesday at market close to $313.90 at market open.
Facebook’s earnings call revealed that it fell short on revenue projections for the quarter, although it exceeded projected earnings. Stock buybacks and new ventures seem to bode well for the company. But with all that to consider, do experts view Facebook stock as a “buy,” “sell” or “hold” right now?
CNBC polled several investors on their thoughts. The consensus? Facebook isn’t faring as poorly as it could be. The company seems to be ahead of Snapchat and other competitors when it comes to managing Apple’s new advertising constraints and is making investments to bolster other areas of its business and drive younger generations of users to its platform.
Rohit Kulkarni, MKM Partners analyst, told CNBC, “After the Snap results, there was a lot of fear and anxiety in the investment community as to how bad it can get for Facebook and other people. I think what Facebook is showing is that they prepared for Apple IDFA, they are probably three or up to six months ahead of the rest of the ad tech ecosystem.”
Gene Munster, managing partner at Loup Ventures, commented on Facebook’s “daily average users,” which are rising consistent with pre-pandemic growth figures. “Investors [are] recognizing something that your traders talked a lot about in the last couple days… This dynamic where there is no other place to go beyond Facebook,” Munster said.
Or is there? As social media audiences may be out there looking for the “next big thing,” Facebook continues to invest in ways to make the platform more enticing for creators and, especially, for the younger generations.
Nadine Terman, founder and CEO of Solstein Capital, pointed out that Facebook is investing to offset weakness in its core business, CNBC reported. “As an investor, that should be an area of concern which gets to the point that many folks here made which is, is it because they’re not getting the take-up in the younger generation?”
During Monday’s earnings call, Facebook CEO Mark Zuckerberg revealed plans to focus more on its full-screen video Reels feature to better compete with TikTok, which is attracting GenZ, millennials, and even younger members of GenX, in droves. The effort seeks to make Facebook and Instagram more appealing to users between 18 and 29, CNBC reported.
Facebook’s buyback of $50 billion in shares also bodes well for the company, for investors — and for the market in general, said Jim LaCamp, senior vice president of Morgan Stanley Wealth Management. “Facebook’s one of eight stocks that make up 26% of all the market cap right now. And as long as they keep buying these eight stocks, the market is probably not going to fall apart on us. And if they keep moving these eight stocks higher, it’s going to drag other areas up,” LaCamp told CNBC.
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Last updated: October 27, 2021