Texas Capital (TCBI) Down 9.8% Since Last Earnings Report: Can It Rebound?
Shares of Facebook FB popped 2.19% on Thursday to close at $191.78 per share, inching ever closer to their 52-week and all-time high of $195.32 per share. The question is what might have investors excited about the company that has been in the news for all the wrong reasons recently.
Facebook held its annual stockholder meeting in Menlo Park, California on Thursday. The meeting came amid turmoil for the social media giant caught up in a massive user data scandal, which eventually forced CEO Mark Zuckerberg to speak in front of members of Congress, and more recently, EU officials.
Facebook executives on Thursday said that the company rejected all of its shareholder proposals, while all eight of its director nominees were elected, according to Reuters. These proposals included calls for greater oversight and transparency, as well as a new voting structure. This might not surprise many investors as Zuckerberg himself controls a large amount of voting power.
The meeting was also very chaotic and confrontational, with one investor claiming that Facebook’s user data policies and their handling of data were similar to human rights violations. Another pleaded with Facebook not to turn into a “corporate dictatorship.” A plane even flew over pulling a banner that read "YOU BROKE DEMOCRACY."
Facebook and its CEO responded much in the same way they have since the Cambridge Analytica scandal first broke. "We're going to make sure that we take a broader view of our responsibility," Zuckerberg said at the meeting. "At the same time we also feel a responsibility to keep building the next generation of new experiences that are going help us all connect in meaningful new ways."
Still, despite all of these outwardly negative charges hurled at Facebook and executives, the stock climbed. One of the only logical explanations here is that investors don’t think the recent user data scandals will negatively impact Facebook in the long-run.
Furthermore, investors might also see just how cheap Facebook stock looks at the moment. Coming into Thursday, Facebook stock was trading at 22.5X forward 12-month Zacks Consensus EPS estimates. Over the last year, Facebook stock has traded as high as 31.5X—which it hit in early January—and as low as 19.9X.
Facebook stock is also currently trading at a discount compared to its industry's average 26.9X. This industry includes the likes of Google parent Alphabet GOOGL, Baidu BIDU, Dropbox DBX, and many more.
Looking back even further, investors will notice that Facebook stock is trading near its five-year low. With that said, it is hardly a stretch to say that Facebook’s current valuation appears to be rather attractive, especially considering its massive growth prospects.
Therefore, maybe many investors simply blocked out all of the recent news and bought a stock that they view as a great deal at the moment.
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