Facebook, Inc. (FB): Social Media Survey Points to Weakening Numbers, Says Top Analyst

Baird's Colin Sebastian now angles for 32% in upside potential for FB stock amid this period of bad headlines- long-term, though, valuation still looks compelling.


How is Facebook, Inc. (NASDAQ:FB) holding up under the weight of the bad Cambridge Analytica press?

Top analyst Colin Sebastian at Baird chimes in after digesting his latest social media survey: the verdict shows Facebook usage has dialed back, which makes sense with the timing of last week’s swirling “negative” publicity.

To Sebastian, this “survey suggests usage metrics could weaken” for the social media titan- but on a bullish note, this is also “likely short-lived.”

As such, the analyst maintains an Outperform rating on FB while lowering the price target from $225 to $210, which implies a close to 32% upside from current levels.

“Is Cambridge ‘just a flesh wound?'” muses the analyst, commenting: “our checks with advertisers and agencies suggest little impact on ad revenues to-date, although we note the potential for brands and SMBs to pause some Facebook campaigns until headlines subside.”

“Survey results show continued moderation in social media usage; Facebook softness likely reflects some recency bias. As a follow-up to our January social media survey that foreshadowed Facebook’s reported Q4 decline in NA DAUs, our latest survey indicates some additional decline in usage/engagement, particularly among younger demographics, coinciding with recent headlines around data privacy. Importantly, if our survey remains directionally accurate, we would not be surprised by further moderation in usage/engagement metrics in Q1,” continues Sebastian.

All the same, “risks of platform irrelevance remain very low,” even amid what follows as “another black-eye for Facebook in a multi-year battle for public trust.” In full crisis resolution strategy, the company is working to gain back user trust, highlights Sebastian.

True, the analyst has scaled down his target expectations on back of the “mixed” survey data results, but he ultimately wagers “shares remain attractive for investors with medium/long-term horizons.”

Colin Sebastian has a very good TipRanks score with a 76% success rate and a high ranking of #13 out of 4,768 analysts. Sebastian yields 26.0% in his yearly returns. When recommending FB, Sebastian earns 26.0% in average profits on the stock.

This social media titan is one of Wall Street’s tech darlings, according to TipRanks analytics. Out of 32 analysts polled in the last 3 months, 29 are bullish on FB stock, 2 remain sidelined, while 1 is bearish on the stock. With a compelling return potential of nearly 41%, the stock’s consensus target price stands at $225.63.