Facebook (FB) Storms Into the Blockchain Space; Top Analyst Weighs in on the Stock
In case you missed this news earlier last week: Facebook (FB) acqui-hired the team behind blockchain startup Chainspace. The startup was founded by University College London PhD researchers and aims to power “a community of makers” by “helping everyone have more control over our digital world,” according to its website. Behind the company is highly respected team that has written many peer-reviewed papers on crypto and blockchain technology, which will not be apart of Facebook.
Chainspace has developed a decentralized infrastructure that had been running in alpha. Their infrastructure utilized sharding and proof-of-stake; similar to where Ethereum 2.0 is moving towards. Chainspace notes on its website that a global consultancy is using Chainspace for the EU project DECODE. DECORE gives people ownership of their personal data, which is becoming increasingly important in the Western world, especially after the Facebook data scandal and the GDPR legislation in Europe.
RBC’s top analyst Mark Mahaney believes this is an important move for Facebook: “This acqui-hire serves as a data point to support our long-term thesis….[which] we outlined our hypothesis explaining how the Internet is at the embryonic stages of a potential massive paradigm shift powered by decentralized computing on public blockchains.” Mahaney says, “it may appear that Facebook purposefully hired the technical team related to DECODE” but believes that “this was simply an acqui-hire to expand Facebook’s internal crypto team’s expertise.”
Mahaney rates FB an Outperform with $200 price target, which implies about 20% upside from current levels.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Mahaney has a yearly average return of 22.9% and a 68% success rate. The analyst has average gain of 15.3% when rating FB and is ranked #32 out of 5,163 analysts.
Facebook is actively working on doing a better job policing its network following the Cambridge-Analytica scandal and Russian election interference through its site. While on one hand it is hiring thousands of people to better monitor the site, it is also experimenting with new technology. Perhaps — or perhaps not — this is a move in the experimentation department. But nevertheless, this moves further shows the importance internet companies are placing on blockchain, and beginning to really increase investment and focus on the technology.
All in all, Wall Street “likes” Facebook, a lot. TipRanks analysis of 41 analyst ratings shows a consensus Strong Buy rating. Of the 41 analysts, 33 recommend Buy, six say Hold and two recommend Sell. The average price target stands at $189.33, which represents a 15% rise from current levels. (See FB’s price targets and analyst ratings on TipRanks)