Morgan Stanley analysts have once again confirmed Facebook Inc (NASDAQ: FB) as their favorite in the league of large-cap social media stocks. In a statement on Friday, they said the Menlo Park-based company’s focus on investing and fundraising will help maintain strength in the post-pandemic world. Morgan Stanley said:
Among the big cap names in social media, we remain the most positive for FB as we see their leading ROI, product innovation, and money making opportunities (reels, marketplace, shopping, etc) enable them to get through to manage the difficult short-term headwinds in engagement.
The ad growth will help Facebook offset the decline in engagement
Are you looking for quick news, hot tips, and market research?
Then sign up for the Invezz newsletter today.
Morgan Stanley said the drops in engagement will be further offset by ad growth in the coming months.
“We’re also finding that even a slight increase in news feed ads could offset a decrease in engagement. In our view, the extent to which FB can deliver on Topline could result in $ 16 + of free cash flow per share for the next year, which is a path towards our $ 440 (~ 30% up) forecast, ”they said.
As people around the world keep getting vaccinated, the time spent on social media is likely to decrease. To beat market estimates in fiscal second quarter, Facebook needs to focus on innovation and ad prices / ROI to drive ad growth, according to Morgan Stanley.
“It will become increasingly important for social platforms to continue developing products (social shopping, short-form videos, cards, etc.) that drive engagement and deliver measurable ad ROI that directly links ad spend to transactions. This is not a new dynamic, but it is becoming increasingly important in order to meet or exceed the forecasts, ”the analysts continued.
Facebook’s latest AI detects deepfakes
In similar news said Facebook on Fridaythat it worked with Michigan State University to develop a new AI system that successfully detects deepfakes.
Facebook opened on Friday with a loss of more than 0.5% on the stock exchange and later fell another 1%. Including the price movement, the stock is now trading at $ 331 (£ 239.40). By comparison, the share price was $ 269 at the beginning of the year.
Facebook gained more than 30% on the stock exchange last year. At the time of this writing, the American multinational has a market capitalization of approximately $ 942 billion and a price / earnings ratio of 28.45. Last week, Carolyn Everson, vice president of global marketing solutions at Facebook, announced her retirement from the company.
Invest in crypto, stocks, ETFs & more in minutes with our preferred broker,
67% of retail investor CFD accounts lose money