BTIG has removed its price target on Facebook as part of the downgrade
Facebook Inc (NASDAQ:FB) stock remained flat despite being downgraded by investment firm BTIG in an updated research note sent out to clients and investors today. BTIG analyst Richard Greenfield started off by highlighting that when Facebook started out the firm initiated coverage with a Sell rating. He added that in 2013, the firm upgraded to Buy on the back of the social media giant’s progression into mobile.
Now that the stock has crossed the firm’s $117 price target set over a year ago, trading above the $120 mark, Mr.Greenfield has decided to brought down his rating to Neutral from Buy. The analyst believes that the risk reward ration on Facebook is not attractive anymore.
“Facebook remains one of the only ways to play the shift of legacy media ad dollars to mobile and its advertising growth rate remains staggeringly high, especially for a $348 billion market cap company” he said.
The analyst commends the company on holding a long term approach over the progression of its business in comparison to ‘legacy media companies’ the firm covers that are otherwise aim mainly on bumping short term earnings with advertising dollars moving increasingly towards mobile. However at the same time points out that investors expectations have moved sky high . Additionally the analyst highlights that Facebook’s new mobile video experience is taking far too long to reap in profits than previously expected.
Earlier this week Facebook surpassed the 1 billion mark in terms of messenger users. This is a milestone for the company that has been operating a twin messenger service along with Whatsapp. With the company making increasing efforts to develop ways to monetize the messenger service, this could results in a whole new viable revenue stream for the company.