Facebook’s (FB) stock had a year to forget.
While shares reached record highs earlier in the year, multiple privacy scandals and a congressional investigation into Russian interference have sent investors – and users – running from the stock. The ongoing “Delete Facebook” movement points to the larger issue of trust between users and the world’s largest social network. While most users know Facebook’s business model is predicted on selling them extremely personalized ads, many users felt the company breached their trust by allowing third-parties to access sensitive data.
But even amid the movement and selloff, Tigress analyst Ivan Feinseth is still extremely optimistic over the stock, reiterating his Strong Buy rating. (To watch Feinseth’s track record, click here)
The analyst tries to separate noise from numbers. He reminds investors that Facebook has “more than 2.6 billion people (on one of its) products; Facebook, WhatsApp, Instagram, and Messenger, on a monthly basis. In addition, more than two billion people use one of its services on a daily basis.” Feinseth says Facebook “continues to benefit from growing advertising revenue as it increases mobile engagement and greater advertising effectiveness on Instagram, and with embedded video ads.”
Looking towards the future, Feinseth says Facebook “will drive growth through the ongoing monetization of Instagram, Messenger, Oculus, and WhatsApp platforms along with other new products including Marketplace, Stories, and Watch.” What the analyst is really saying here is that, while historically Facebook generated nearly all revenue through its namesake platform, investors can expect to see a more balanced revenue stream across multiple services.
On the privacy challenges that face Facebook, Feinseth says, Facebook’s “ongoing investment in increased surveillance and compliance will ultimately create a safer and more trustworthy environment that will continue to attract increasing user engagement and advertising revenue.” The analyst sees users returning to trust Facebook, so investors can resume focusing on only the company’s strong numbers.
The investment community is extremely bullish on Facebook. According to TipRanks analysis of 38 analyst ratings on the stock, the consensus ratings is a Strong Buy with 31 analysts recommending Buy, six recommending Hold and one recommending Sell. It’s average price target is $188.31, or a 41% upside from current levels. (See FB’s price targets and analyst ratings on TipRanks)