Shares fell 3.9 percent on Tuesday, ending below their 200-day moving average for the first time since March.
from Bloomberg
Published on Oct 26, 2021
Facebook Inc. analysts and investors maintain their positive views on the social media company’s long-term prospects, despite shares falling after a tepid quarterly report and additional reports of hate speech and misinformation on the platform.
More than 80% of the analysts watched by Bloomberg recommend buying Facebook shares, with Rosenblatt Securities joining the chorus on Tuesday with an upgrade according to the latest report. Although companies recognize short-term headwinds, particularly Apple’s policy of restricting data collection on iPhones, companies continue to see a positive long-term growth story, along with a valuation that seems more attractive after the recent losses.
“After the reset last night, the share looks briefly oversold,” wrote Rosenblatt analyst Mark Zgutowicz, who sees limited potential for further short-term weaknesses.
Shares fell 3.9% on Tuesday, ending at their lowest level since May and below their 200-day moving average for the first time since March. The stock is down more than 17% from its September high on negative headlines and scrutiny of Facebook’s content strategy and some of its products. For 2021 it remains up almost 16%.
Facebook’s third-quarter revenue fell short of expectations and gave a sub-consensus revenue outlook, again warning of the impact Apple’s policies have on growth. While a number of Wall Street firms scaled back their price targets, they noted a number of positives, including the company’s exposure across the Facebook app family and the company’s ability to tackle the Apple issue.
After losing nearly $ 200 billion in market value in less than two months, Facebook abandoned its $ 1 trillion valuation and lost its place among the top five most valuable US companies. However, it has also made the stock the cheapest among US mega-cap tech names.
The valuation as well as the income, which is expected to continue to grow double-digit in the next few quarters, kept investors positive.
“We’re still pretty optimistic about the name. It has the lowest valuation of its competitors, is trading at a discount to its long-term multiples, and the stock has already retired, ”said Jordan Kahn, chief investment officer of ACM Funds, who owns the stock. He also said the string of negative news about the company was not a reason to sell, citing an issue affecting sentiment versus fundamentals.
“Facebook has had these periodic episodes of scrutiny, but it always does a great job navigating the waters and continuing to make profits,” he said in a phone interview.
