E Facebook: Nobody Can Compete

Shares of Facebook (FB) have been on a rip-roarin’ ride this year already with the stock up 17.7%. It was just earlier this year that I penned the article picking Facebook as the best stock to own for 2017 and Mr. Zuckerberg has not failed to produce exceptional results for fellow shareholders. But it is always important to keep one’s ego in check, not letting the head inflate too much by examining under the hood every once in a while to see what has been taking place at the company. I believe right now is a good time to do just that after shares were up 2% on a day where the market was flat on Wednesday.

It feels as if the stock is constantly getting positive sentiment by analysts and Canaccord Genuity is one of those firms that showed some love for Facebook recently. The reiterated “buy” rating was predicated on the stock’s valuation metrics and predicts that the Facebook platform and Instagram will do much of the heavy lifting this year in terms of bringing in the revenue. The price target was set for $150, which is a good 11% from here. The average analyst price target has the stock at $159.72, or another 18% higher from these levels.

Source: Yahoo Finance

Also reiterating their “buy” rating on the stock, SunTrust Robinson Humphrey says their price target is more of a modest $142. The reiteration here is based on the analyst’s predictions that Instagram should be able to bring in more revenue than initially anticipated by the analyst for 2017 and 2018. The analyst believes that user growth will accelerate at a quicker rate, that more users will use the service for the first time, international expansion, and enhancements to the app will drive usage, thereby bringing revenues from the app higher. Instagram is definitely the crown jewel here now stealing users away from Snap.

Some of what Facebook has been doing to increase the popularity of the ecosystem includes things like adding group video chatting to the Messenger app. Most all of us have been part of a group text thread which can be fun at times depending on the topic of conversation, but now that Facebook has added video to the mix makes messaging even more appealing. The millennials these days can’t detach their phones from their hands and we’ve heard stories on how the cool new way to hang out with friends is just to stay at home and get on the iPhone/Android and video in for a hangout. There is undoubtedly increasing brand loyalty in the name because of the cool new innovative ideas they keep coming up with to keep the users engaged.

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Disclaimer: This article is in no way a recommendation to buy or sell any stock mentioned. This article is meant to serve as a journal for myself as to the rationale of why I ...

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Dan Richards 4 years ago Member's comment

All the hype has been about #SNAP, but I think the safe bet is still #Facebook.