In the midst of a global epidemic, some of the world’s biggest advertisers said they would boycott Facebook Inc., with almost all of its money coming from online advertisements.
It is reasonable to think that Facebook will have a hard time to trade and stock. But that did not happen on Thursday afternoon following the social-media company’s second-quarter earnings report, as Facebook shares went on record Friday morning after analysts made optimistic estimates from the report.
“Obviously, everything is great!” Bernstein analyst Mark Schmulik has written.
Shamulik attempted to explain the severity of the situation, and Facebook’s inconsistent response in FB,
Performed with an analogy.
“Imagine 1000+ customers stopping your subscription, you can’t sell half of your product in a major market or on a certain device, knowing that users will spend less time in your store, and a global epidemic. Is uncertain, ”the analyst wrote while maintaining an improved rating and $ 285 price target. “And yet Facebook is seeing 10% [year-over-year, quarter-to-date] Guide development and maintain this level for Q3. “
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Evercore ISI analysts described the results as “spectacular” and “stunning in the light of the macro backdrop”.
Analysts wrote, “The tenure of growth in 2Q appears uneven; at its peak, the 2Q growth rate has reached 20% YoY,” while maintaining an improved rating and $ 300 price target. “Even taking into account the company’s specific cautious approach, models across the road will materialize more”
According to FactSet tabulations, more than 20 analysts shifted their price target on Facebook stock to a higher level as a result of earnings, as shares rose to $ 250 on Friday morning and reached record highs. It raised the average price target by about $ 30 more than $ 304 Friday to $ 274.32 early Friday.
Facebook’s revelation that ad revenue was steadily growing at a rate of around 10% in July was the month advertisers aimed for a wider boycott, the biggest reason analysts think there was little concern about the #StopHateForProfit approach by big advertisers . Some believed advertisers would stay away for longer, as Facebook CEO Mark Zuckerberg reportedly said.
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“we assume that [the boycott] Facebook has a strong track record over the past two years to address advertiser concerns, “Mizuho analysts have built a strong track record, maintaining a buy rating and raising their price target from $ 270 to $ 285.
Morgan Stanley analysts were slightly concerned that the growth rate was lower than they expected, and although they believe the boycott will not last long, they are concerned about the eventual impact on the shares.
“10% advertising revenue growth in July (and expected 10% in the quarter) is a notable move from our projected ~ 15% Y / Y growth in June. To our mind, the near-term impact expected by exclusion and less busyness on Facebook is likely to be larger as engagement is decreasing by asylum-level decline, ”analysts wrote, while maintaining an overweight and their value Raising the target. $ 270 to $ 285. “While this is only a near-term issue (and we expect boycott advertisers to eventually return), this flatter recovery slope combined with IDFA uncertainty in 4Q on strategic stocks. Can create pressure. “
Analysts reported that in the meantime, Facebook has continued to grow due to a jump in advertisements for small e-commerce companies and videogames. In other words, all the ads that users are looking for masks and paying for the mobile game Facebook.
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RBC Capital Markets analyst Mark Mahan credits “opportunistic gaming and e-commerce advertisers [taking] Gain of depressed pricing, “and wrote that” online advertising has been negatively impacted by COVID, while … Facebook has proved to be the most flexible ‘net advertiser. “
While many analysts increased their price targets and financial estimates for Facebook, there were no major ratings changes, likely because many analysts already consider the stock a purchase. Of the 47 analysts covering Facebook tracked by FactSet, 39 consider the stock equivalent to buy, while six hold it and rate the stock as only two as selling.