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The Next Big Thing For Facebook (FB) Stock


It’s no mystery that people prefer sharing visual content like photos and videos with specific contacts rather than exchanging blocks of text. That’s why Snapchat got off to a strong start, and why Instagram, bought by Facebook in 2012, is growing so well. That said, Zuckerberg and his executives know that Facebook (FB) needs to become more Instagram-ish, so they have done just that with the addition of Facebook Stories. It’s small today, but it’s growing quickly.

Indeed, Rosenblatt analyst Mark Zgutowicz believes Facebook Stories may turn out to be the bigger “story” of CY19 as it accelerates the Stories monetization timeline.

“We believe Facebook Stories (FBS) is quietly gaining momentum at both marketers and users, particularly business, and expect its usage to match Instagram Stories (IGS) in CY19. Combined, we believe IGS and FBS daily users could reach 1.5B exiting CY19E, roughly eclipsing existing News Feed and Messenger daily users, while opening premium brand spend to a scalable Stories platform,” Zgutowicz noted.

The analyst continued, “While Instagram Stories (IGS) has gotten all the press, last quoted at 400M daily active users (DAUs) in June, Facebook Stories (FBS) is quietly emerging as a strong second pillar to Facebook’s Stories strategy and predicted evolution of social sharing. FBS has only 8 months existence to IGS’ nearly 2 years, yet it already has amassed a reported 300M DAUs exiting September, up +100% q/q. We’re now hearing Facebook is making more deliberate offensive moves to further accelerate FBS usage, particularly with small businesses. Recent feature changes to business pages make it easier to post stories direct from a business profile, which now defaults to story pages vs News Feed (NF). In other words, Facebook is increasing FBS utility at the expense of NF, the timing of which makes sense as we continue to hear marketer interest in FBS is picking up, aided by IGS learnings and easy leveraging of ad creative across IGS and FBS.”

All in all, Zgutowicz reiterates a Buy rating on Facebook stock, with a price target of $206, which represents a potential upside of 39% from where the stock is currently trading. (To watch Zgutowicz’s track record, click here)

Zgutowicz is certainly not the first analyst with an optimistic outlook for the social media giant, as TipRanks analytics showcasing FB stock as a Strong Buy. With an average price target of $184.69, analysts are predicting an upside of nearly 25%. In total, the stock has received 34 ‘buy’ ratings vs. just 5 ‘hold’ and 2 ‘sell’ ratings in the last three months. (See FB’s price targets and analyst ratings on TipRanks)

 

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