Facebook Stock Forecast 2019: Executive Exits, Data Scandals, Downgrades… Ratings Show The Most Bearish Time Since 2013
So how profitable is investing in social media stocks? Facebook stock has worst day of 2019 after executive exodus, AG investigations and analyst downgrade.
Facebook shares extended their losses Monday after a downgrade from analysts at Needham.
There’s growing concern that more executives could leave following the departure of Chris Cox, the company’s product chief, who resigned last week.
State attorneys general are looking into how big tech companies like Facebook and Google handle user data as the federal government fails to act.
Facebook Stock Downgraded
A lot of executives are heading for the exits at Facebook. Should you do likewise?
Facebook stock is now about 27 percent lower than its July all-time high, and Street sentiment — as measured by the number of hold and sell ratings — is the most bearish it’s been since 2013, based on FactSet estimates.
While growing skepticism can sometimes be a good contrarian indicator, Strategic Wealth Partners’ Mark Tepper says to stay away from the stock, saying its ad revenue is facing a hit.
“I mean it’s trading at a significant discount to the S&P, but in my opinion it’s for good reason,” Tepper said Monday on CNBC’s “Trading Nation.” “They’ve just got an absolute ton of headwinds, like privacy, government regulation, key employee turnover. But my main concern with them is their digital advertising platform.”
Earlier Monday, Needham downgraded the stock to hold, citing issues including management turnover and a tougher regulatory environment. Over the last few weeks the company has announced several key changes, including high-profile executive departures and a plan for greater privacy.
Teppers said Facebook was a valuable advertising platform because “they knew so much about their users and could really zero in on their ideal customers. But all that changed. Demographics are gone and their platform has been diluted.”
Should You Invest In Social Media Stocks: Best Social Media Stocks To Watch and Buy In 2019
Companies like Twitter, Facebook, and YouTube have found a way to attract these massive userbases, while the revenue was mostly driven by advertisements as these companies’ services are free, and “always will be”, as Facebook says.
Despite massive success in the market, there are still some regulatory uncertainties tied to some of these social media giants, so how profitable is investing in social media stocks?
Weibo Corporation (WB)
Microsoft (MSFT) [LinkedIn]
Social Media Industry: How Profitable is Investing in Social Media? As social media networks are booming ever since the late nineties with social media giants like Facebook counting billions of users across the globe, this online social phenomenon has slowly become a great part of our everyday lives.
Moreover, these social media startups soon turned into multi-billion corporations, turning a massive userbase into billions in revenue, which very soon attracted great interest from investors focused on social media stocks.
How Profitable is Investing in Social Media Companies
Despite the fact that Facebook was involved in a drama revolving around selling users’ data to third party companies, while EU imposed regulations that made the company ask users in the European Union whether they are allowed to use the information they need also legally bound to explain for what and how this data is used, interest that investors have in social media doesn’t seem to be declining.
During 2017, Facebook reported 499 billion dollars in revenue, with Twitter weighing 13 billion dollars within the same time period, with great odds of showing further progress in the growth rate.
Both companies are also showing immense progress a year later as well, as Twitter is recording 650 million dollars in revenue growth through advertising, and with Facebook reporting 33% of growth in revenues during 2018 with 13.37 billion dollars, we might see a difference between the two social media giants if we add the fact that Facebook missed its estimates by 40 million dollars for the year.
Facebook stocks might have seen a decline after the data selling drama, however, this social media giant is still attracting users with finding new ways to keep them returning aside from making excessive profits from advertising.
Snap, Twitter, and Yelp overvalued, Weibo and Facebook?
According to Fool, Stock for the two social-media companies is being affected by new data points, changing expectations in 2019.
Social-media stocks have been in the crosshairs over the past couple years, as privacy and safety concerns have investors rethinking the risks associated with these former highfliers. Still, social-media stocks continue to post solid revenue growth, as they build on their efforts to steal advertising dollars away from traditional media. The crosscurrents have made these stocks battlegrounds among investors.
This earnings season, two social-media companies — Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) are moving in opposite directions. Facebook soared over 10% after its fourth-quarter earnings release, while Twitter declined by a similar amount following its own report.
So what’s making one zig while the other zags?
Driving in opposite directions
While fears over user declines plagued Facebook last year, recent results showed no material effect on users, paving the way for the stock’s recovery. Meanwhile, Twitter’s surging revenue last year has now been called into question, as the company’s total addressable user base now seems more uncertain. These new data points relative to prior expectations are what’s driving Facebook and Twitter in opposite directions.