Is It Time to Buy Facebook Stock?
Monday, June 4, 2018, 6:00 AM | Leave Comment
Last month, Facebook founder and CEO Mark Zuckerberg testified in front of the US Congress in the wake of the huge scandal that hit the company regarding data privacy breaches by political research firm Cambridge Analytica.
In the view of Cowen & Co. analyst John Blackledge, “Mark Zuckerberg did a good job in front of two separate Congressional Committees, laying out what happened and how Facebook is addressing Cambridge Analytica’s abuse of Facebook data, as well as Russia’s election interference”.
However, many Wall Street experts downgraded their rating of the stock and lowered their target price for shares in the world’s most popular social network, while still maintaining a generally positive outlook. So, is it time to buy Facebook stock?
Facebook’s business model is designed to ensure that the company can weather storms such as this, since users are likely to keep on using the platform, and because advertisers are well aware of the unique power of the social network to reach their customers.
For these reasons, Facebook’s revenues are expected to keep rising, although the company must now be more selective in terms of advertising and privacy issues if it is to avoid further scandals.
As explained by CNBC, “the company is investing “heavily” in safety and security, including workers with language skills for detecting hate speech, and tools for verifying government IDs ahead of elections in the US and abroad by the end of the year.”
The social network recently proved that the company’s stock remains a solid investment, posting quarterly earnings significantly higher than expectations. Perhaps surprisingly, its number of daily users also bounced back, indicating continued steady engagement across its community.
Facebook earnings per share reached an adjusted value of USD 1.69, well above the expected USD 1.35, while its revenues topped USD 11.97 billion compared with the USD 11.4 billion anticipated by analysts.
For boutique investment house Oppenheimer& Co., Facebook shares have already priced the downside of the scandal and the consequences it could yet have on the regulatory environment, making the stock an attractive buy.
Brokers and investors worldwide are always looking for lucrative trading opportunities and Facebook might be one such option.
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