Facebook is set to close its worst week since August.
The stock took a tumble after guiding for weaker growth in the first quarter compared with its fourth quarter.
Mark Mahaney, tech analyst at RBC Capital Markets, said he still sees growth for Facebook in the near future, despite fourth-quarter disappointments.
“Near term we’re a little less constructive. I still like Facebook as a play as we go through 2020. They should be a major derivative off of the surge, the increase, the acceleration we’ll see in global advertising because of the U.S. elections, because of the Olympics. We still think they’ve got these very large growth catalysts out there in terms of WhatsApp monetization and commerce activity on Instagram. So, we like the asset but, near term we were disappointed. We brought numbers down, our price targets still shows material upside from here, so we’ll stick with the stock.”
Ron Josey, managing director of equity research at JMP Securities, sees a lot of opportunity ahead for the tech giant.
“The issue coming out of earnings is not necessarily the deceleration that happened in the fourth quarter … [It’s] the impact to revenue growth in advertising, revenue to come, due in part to three main things — between continued privacy regulations, some targeting changes in mobile OS in browsers and internal Facebook settings. When you put that all that together it creates some concern moving forward but frankly when you take a step back and you realize that Facebook has 8 million advertisers, multiple new products coming from a monetization perspective and newer business around payment, I think there is a lot of opportunity ahead. Just for now it’s understandable why the stock is down given those concerns. However, taking a step back with those 3.2 billion users, there’s a lot of good things going on at Facebook, too.”
Joel Kulina, head of technology at Wedbush Securities, said Facebook is facing growing pains.
“They’re a victim of their success. As you grow, it’s going to get harder to live up to those growth expectations that a lot of investors have become accustomed to but … I’m surprised by the rosy bullish spin that the majority of the sell side is kind of putting on it. … Expectations were massively elevated into the print, the stock was up 70% year over year, up 25% going back to September. … And despite all the regulations headwinds that are continuing to grow globally you have a U.S election coming up. … It really is going to be dependent on the election and how Facebook could navigate the regulation landscape. But for me, I think if you’re looking for large-cap growth exposure, I think you’re going to want to take a look at the software side of things. Facebook’s definitely hit a hurdle … and I think the stock will be in the penalty box for a few months.
Jim Cramer, host of CNBC’s “Mad Money,” said that he is still in Facebook’s corner but sees the stock continuing to sell off.
“Instagram is great, Facebook is not that great. … Political ad spending is good but we’ve got the hot-red button there in payment significant opportunity. … Regulatory issues are a headwind and I know that they have to spend more money to please. … It’s not growing as fast and people are saying this is the slowest growth since the IPO. If we remember the IPO it was the hottest IPO pretty much ever. So, I don’t want to give up on Facebook … I want to be more supportive than the market is indicating but, if you see a stock down 15% it means it’s not done, it’s going to keep selling.”
Roger McNamee, co-founder of Elevation Partners, laid out where he sees tech today and the effects regulations will have on these industries.
“I’m not a trader so, my time horizon is much, much longer. … This is a very inexpensive stock for what you get. But I believe they face structural problems that they cannot fix and it’s not just in the U.S. In Europe, in Asia, the pressure to regulate is really intense because … these industries are so strategic that you have to regulate them to protect them … and I think that is where tech is today.”