Should you like the most recent Facebook status update?
Facebook just added three more friends and that’s moved the stock up almost 5% today.
S&P Capital IQ and Jefferies upped their ratings of the social network to a buy while BMO increased their rating to an “outperform”.
While kids are starting to sour on Facebook as more of their parents and grandparents join, the analysts feel that maybe it’s time to give the House That Zuck Built a second look. “We think concerns over declining engagement, particularly among the younger demo, have created a buying opportunity,” said the research team at Jefferies.
All three cited potential growth in new businesses, particularly video advertising, as a reason to be more optimistic. But, such rewards would require what S&P Capital IQ referred to as “substantial investments” (read: Facebook needs to spend a lot of money).
Even with the upgrades, Facebook is still trading where it was at the beginning of this week. The stock is down over 13% in 2013 and, as everyone likes to recall, it’s down about 39% since its IPO.
So far, the consensus amongst analysts has this year’s revenue growth at about 32%. That’s down from last year’s annual revenue growth of 37% and a lot slower than the year before’s growth of 88%.
Do the new initiatives offer hope for shareholders in the coming week? We ask Talking Numbers contributors Enis Taner, Global Macro Editor of RiskReversal.com, and Richard Ross, Global Technical Strategist at Auerbach Grayson, if this is one Facebook status change you should like.
To see what Taner and Ross have to say about where Facebook is headed next, watch the video above.
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