By
Bhushan Akolkar
April 25th, 2024
Despite being the talk of multiple controversies over the last year, analysts express strong bullishness on the future rise of Facebook (FB) stock amidst strong fundamental and technical indicators.
Facebook has been going through a very rough phase over the last year. Firstly, the Cambridge Analytica scandal in 2018 surfaced the unethical use of Facebook’s compromised user data. This had a huge negative impact on the social media giant’s reputation.
The privacy concerns were so big that US regulators and lawmakers grilled Facebook CEO Mark Zuckerberg in a testimony. The company even had a hard time convincing regulators over its upcoming cryptocurrency project Libra.
Last year post the Cambridge Analytica scandal, Facebook (FB) stock price tanked reaching close to $120 by the end of December 2018. However, 2019 has been good so far for the social media mogul. Until last month of July 2019, the Facebook stock topped above $200 levels, however, it has shown a 10% recovery since then.
Besides, company CEO Mark Zuckerberg has reportedly sold 1.6 million shares worth $300 million in the open market, during this month of August. With this sale, Zuckerberg’s total share sale this year has touched 2.9 million shares. However, there is no reason to panic about this.
In a Facebook blog post in 2017, Zuckerberg already announced to sell 35-75 million shares over an 18-month period to fund philanthropic efforts through his Chan Zuckerberg Initiative. Post this selling, Zuckerberg still owns 375 million shares of the company.
The initiative funds several societal causes like science and education, immigration reforms, criminal justice reform, and housing affordability. But experts from the financial world see Zuckerberg’s stake sell as an activity to diversify his holdings and no major reason for concern. Ed Butowsky, Managing Partner at Chapwood Capital Investment Management, told CCN:
“The most common reason for insiders to sell shares of stock has been to diversify their own financial holdings. As much as an insider may believe in the future success of their company, nobody wants to have all of their eggs in one basket. Any number of things could befall a company or stock that an insider may not have any knowledge of, or never see coming.”
Analysts Suggest Buying Facebook Stock
With the Facebook share recovering nearly 40% this year, analysts expect the upward journey to continue. Moreover, Facebook’s Q2 2019 earnings report shows a 28% jump in the company’s revenues. Facebook also has some big plans lined up like integrating its two businesses – Instagram and WhatsApp – under one parent umbrella.
Hatem Diab, Managing Partner at Gerber Kawasaki, expressed bullishness on Facebook stock while speaking to CCN. Diab said:
“Facebook seems to continue growing revenues and has additional levers to pull should they decide to further monetize Instagram and WhatsApp. While the regulatory environment looks murky from a strictly investment standpoint, they seem, with Google, the only game in town for digital advertising. So for the short term, I would think FB will keep performing well.”
Besides, the strong fundamental and technical indicators suggest that FB stock can rally at least 25% from the current levels.