Facebook (Facebook Stock Quote, Chart, News NASDAQ:FB) certainly has its issues and critics — from privacy concerns and election advertising to regulatory and anti-trust concerns — but the company’s impressive growth profile should keep investors happy, says fund manager David Baskin.
“We own Facebook, chiefly for growth investors —it’s not a dividend stock but it’s not expensive compared to its growth,” said Baskin, president of Baskin Wealth Management, speaking to BNN Bloomberg on Tuesday.
“The question is when do they run out of humans to sign up —when everybody on Earth who owns a cellphone is a Facebook customer, you don’t know where the growth is coming from. But that’s when you invent Instagram, I guess, or WhatsApp. It’s a terrific company.”
Facebook CEO Mark Zuckerberg is taking a hard stance on political advertising, saying that curtailing such ads amounts to a free speech issue, a position counter to the social media company’s competitor, Twitter, where CEO Jack Dorsey a little over a month ago announced that Twitter would be banning all political ads, saying that a political message’s reach “should be earned, not bought.”
The heat is being turned up in other ways on Facebook, which faces anti-trust investigations in the US where the Justice Department earlier this fall said that it is opening up a probe on the company, the fourth in the United States including those by the Federal Trade Commission, a group of attorneys general and the House of Representative Judiciary Committee.
But the brouhaha hasn’t bothered the market, where Facebook’s share price has climbed impressively in 2019, currently sitting up 50 per cent.
This week, Piper Jaffray initiated coverage of the stock with an Outperform rating and $230 target price, implying a return of 16 per cent over the next 12 months. (All figures in US dollars.)
“Following a turbulent few years for Facebook, we believe the company has emerged well positioned and, with increased opex/capex spend now easing, along with evidence (in the form of recent quarterly results) that neither users or advertisers have abandoned Facebook properties, investors have taken a more optimistic view of FB shares,” said Piper Jaffray’s Michael Olson wrote in a note.
“There’s a lot of pressure about its advertising and pressure on taxation now from France and other countries in Europe, so it’s not without its issues. And, of course, Mark Zuckerberg is a polarizing figure. But we take the bad with the good,” Baskin said.
Facebook last delivered its quarterly earnings in late October, showing revenue up 29 per cent year-over-year to $17.65 billion and earnings of $2.12 per share. Analysts had been expecting $17.37 billion in revenue and earnings of $1.91 per share.
Facebook’s daily active users grew to 1.62 billion while monthly active users across its various platforms hit 2.8 billion, a slight rise sequentially.
“We had a good quarter and our community and business continue to grow,” said Facebook CEO Mark Zuckerberg in a recent statement. “We are focused on making progress on major social issues and building new experiences that improve people’s lives around the world.”