Merrill Lynch Remains Positive on Facebook Inc (FB) Despite Overstatement of Video Viewership Data Misstep

In a recently published article, the Wall Street Journal points to a Facebook Inc (NASDAQ:FB) help center post from over several weeks ago indicating the social media giant “inadvertently overstated” video viewership data. In not taking into account videos viewed less than 3-seconds in duration, which translates to videos that did not merit billing, FB could be guilty of overstating “average duration of video viewed” data to the tune of almost 60 to 80% of an overshot.

As stated by the WSJ article, “media companies and publishers are affected, too, since they’ve been given inaccurate data about the consumption of their video content across the social network.”

Despite the “potential metric misstep,” Merrill Lynch top analyst Justin Post remains positive, reiterating a Buy rating on shares of FB with a $150 price, which represents a 17% increase from where the stock is currently trading.

Though neither the analyst’s estimates nor view on the giant have changed, Post does acknowledge there are still concerns raised with the WSJ article, looking at the aftermath of the data reveal in relation to the overall FB brand, the company’s ties to its current advertisers, and “confidence in future internally generated data.”

For Post, the issue is that “The misstep raises the unanswerable question of how beneficial the video duration viewed metric was in drawing ad dollars to Facebook.” Moreover, Post predicts a bit of open-ended pushback from advertisers, as a result of shortcomings in third party measurement on FB and also springing from challenges in measuring the direct benefit (ROI) from video advertising, which the analyst asserts makes “average time spent viewing ads important.”

“Given the lack of negative news on Facebook, we think the stock could see some pressure related to the WSJ concerns, but our initial view (pre advertiser checks) is that that the measurement error will not have a material impact on advertiser demand,” Post concludes.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Justin Post has achieved a high ranking of #15 out of 4,183 analysts. Post upholds a 76% success rate and garners 19.7% in his annual returns. When recommending FB, Post earns 36.2% in average profits on the stock.

TipRanks analytics demonstrate FB as a Strong Buy. Based on 38 analysts polled in the last 3 months, 33 rate a Buy on FB, while 5 maintain a Hold. The 12-month price target stands at $156.27, marking a 22% upside from where the shares last closed.


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