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Following the boycott by major customers of Facebook ad offering, Bernstein analyst Mark Shmulik maintains his bullish call for Facebook stocks. FB shares are down in today’s pre-market.
The social media giant Facebook Inc (NASDAQ: FB) stock plunged down in today’s pre-market following the massive bullish rally it recorded on July 31. The stock plunged down by 0.42% at $252.60 per share. Facebook has seen two important events whose effect on the stock can best be described as antagonistic.
First, Facebook CEO Mark Zuckerberg appeared in an antitrust hearing of the American Congress Judiciary Antitrust Subcommittee. The virtual grilling session alongside three other top tech CEOs must have impacted on the company’s public image, a position not so favorable to investors.
Few days after the antitrust hearing event, Facebook released its Q2 earnings results which shows an impressive 11% growth in revenue. The pandemic brought an increased demand in social media services as reflective in Facebook’s advertising revenue for the quarter under review which all had a huge rub off on the overall company performance.
The released revenue upturned the damages the antitrust hearing had on the company and saw the company’s stock rise to 6% in the pre-market on Friday. Overall, Facebook currently has a market capitalization of $723.30 billion and its recent performances saw its stock trade near its 52-week record high of $250.15
Trying to make sense of today’s bearish pre-market position, Facebook investors may be reacting to news about another probable antitrust hearing. The antitrust hearing call this time is from the European Union, the 27 member body is looking to level up the playing field for all tech companies, and the dominance of the U.S. big 4 tech firms including Facebook is billed to be probed.
The resilience Facebook has shown which made it post the huge revenue in a coronavirus impacted Q2 may cause the firm’s stocks to upturn in the trading days ahead.
Advert Boycott and FB Stock
As if in a coordinated response, several companies have boycotted Facebook ads, the major source of the company’s revenues. With millions of advert paying companies and clients, the ad boycott involves key companies including Ford Motor Company (NYSE: F), Coca-Cola Co (NYSE: KO), Massachusetts Mutual Life Insurance Co., and many others.
While the ad boycott is to prompt Facebook to censor racist comments and occurrence on its platform, investors were generally unperturbed by the situation as the company’s stock hit Wall Street highs following the Q2 earnings report.
Commenting on the situation, Bernstein analyst Mark Shmulik wrote:
“Apparently, everything is just great! Imagine 1000+ customers pausing their subscriptions, you can’t sell half of your product in a major market or on a certain device, knowing users will spend less time in your store, and the uncertainty of a global pandemic, and yet Facebook is seeing a 10% [year-over-year, quarter-to-date] growth, and guide to keeping this level for Q3.”
Shmulik maintained his price target of $285 on Facebook.
Moving forward, the firm may try to restrategize following the allegations of monopoly by the house antitrust subcommittee. Its many divestment strides such as its stake in Jio Platforms will help it increase its income source from the traditional advertisement option.
While the air of uncertain blows over he company’s stock today, Bernstein and other analysts’ bullish position on FB may be enough to keep investors confident in the shares