Amongst the FAANG family, you could argue that Facebook (FB) generates the most negative publicity. Hardly a week goes by without reports of a new FB crisis. From ad boycotts and data breaches to dissent among execs, news feeds boast a constant stream of Facebook PR gaffes.
However, blocking out the noise, Tigress Financial analyst Ivan Feinseth reminds investors that Facebook is and will continue to be a force to be reckoned with.
Facebook’s ever-expanding universe shows no signs of slowing down. Over 3.1 billion people use one of FB’s products monthly and “180 million businesses use Facebook to stay connected with customers.” The platform also boasts over 9 million active advertisers.
And while many companies have suffered at the hands of COVID-19, the pandemic has provided Facebook with additional business.
“FB saw a significant increase in its number of users, driven by ongoing work, learn, and entertain at-home trends due to the COVID19 pandemic across all products and all regions,” Feinseth said.
The numbers don’t lie. In Q2, MAUs (Monthly Active Users) grew by 11.9% year-over-year to 2.701 billion. DAUs (Daily Active Users) saw a 12.5% year-over-year uptick, hitting 1.785 billion and accounting for 66% of MAUs.
The social media giant is adding new services too, as evidenced by the move into retail with Facebook Shops.
Shops “makes it easy for businesses to set up a single online store with access to both Facebook and Instagram.” Feinseth explained, “The platform is free and easy to use, and businesses can upload their catalog of products and services as well as customize the look and feel of their online storefront.”
There are many more reasons to believe Facebook will keep on growing, in Feinseth’s opinion. He highlights the company’s international expansion with the $5.7 billion investment in India’s Reliance Jio Internet platform, the newly launched TikTok-like Instagram Reels, expanded gaming capabilities with the addition of gaming production studio BeatGames, Facebook Dating, Facebook News, and Facebook Share, along with Instagram Shopping and WhatsApp Payments.
Add in $55 billion worth of excess cash, enough to fund “strategic acquisitions, and enhance shareholder returns through ongoing share repurchases,” and you get the sense that the negative news items roll off Facebook like water off a duck’s back.
Unsurprisingly, then, Feinseth reiterates a Strong Buy rating on FB shares, without suggesting a price target. (To watch Feinseth’s track record, click here)
The analyst consensus also rates Facebook a Strong Buy. The breakdown consists of 30 Buys, 4 Holds and 1 Sell. However, FB shares have added 20% in the last month alone, and with the current $302.50 average price target, the Street expects shares to dip 3.5% from current levels. (See FB stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.