More than a dozen brokerages increased their price targets on Facebook Inc shares on Thursday. Investors ignored them.<\/p>\n
Facebook’s shares fell 3 percent to $47.45 at the opening, resuming the roller-coaster ride they have been on since the No. 1 social network released results on Wednesday.<\/p>\n
Facebook’s shares soared as much as 15 percent in extended trading on Wednesday before suddenly falling to $47.40, down 3 percent from their $49.10 close.<\/p>\n
Most analysts attributed the after-hours turnaround to management comments about slowing usage – particularly by young teenagers – and a statement that the company had no plans to increase the frequency of ads shown to users.<\/p>\n
Facebook shares, which have nearly doubled in value this year, breached the $50 mark in heavy premarket trading after a slew of analysts raised their price targets to as much as $65.<\/p>\n
Facebook reported better-than-expected results, helped by strong advertising revenue. But Chief Financial Officer David Ebersman later said there had been a decrease in daily users, specifically among younger teens.<\/p>\n
Ebersman also said the company would not boost the frequency of ads — one per 20 stories in the newsfeed — shown to users.<\/p>\n
Facebook’s newsfeed ads, which inject paid marketing messages into a user’s stream of content, have boosted the company’s revenue and its stock price. But the company has had to be careful not to turn off users with too many ads.<\/p>\n
Analysts had mixed – but mostly positive – views about the outlook for the company’s advertising business.<\/p>\n
“We believe managing ad load is important to maintaining the user experience for the long term,” said J.P. Morgan analyst Doug Anmuth, who raised his price target on the stock by $9 to $62.<\/p>\n
However, Deutsche Bank analysts said they expected mobile ad revenue growth to slow to 75 percent year-on-year in 2014 compared with 80 percent now.<\/p>\n
Analysts at BMO Capital Markets, the only brokerage to downgrade the stock, said they were disappointed about a lack of visibility around Facebook’s plans for social TV advertising. BMO cut its rating on the stock to “market perform” from “outperform.”<\/p>\n
Facebook’s third-quarter advertising revenue rose 66 percent, with mobile ads making up about half of total ad revenue.<\/p>\n
“The well-above trend figure provides confidence that growth can continue at a rapid clip,” Pivotal Research Group analyst Brian Wieser said in a note, upgrading the stock to “buy” from “hold.”<\/p>\n
Some analysts said that while early teenagers were ditching Facebook, some were joining Facebook-owned Instagram. This had put the company in a good position to monetize the mobile photo-sharing app, they said.<\/p>\n
“We continue to see two major catalysts in Instagram and video ads, which could be FB’s next billion-dollar business,” Jefferies & Co analysts said, maintaining their “buy” rating and $60 price target.<\/p>\n
Evercore Partners raised its price target to $65 from $60, and maintained its “overweight” rating on the stock.<\/p>\n
Among others, UBS raised its price target to $62 from $60, RBC Capital Markets to $60 from $52, Cantor Fitzgerald to $63 from $40, and Stifel Nicolaus to $56 from $50.<\/p>\n
Out of 15 brokerages, at least 12 have a “buy” or the equivalent of a “buy” on Facebook’s stock.<\/p>\n
Facebook shares were down 2.2 percent at $48 in early trading on the Nasdaq.<\/p>\n
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