Facebook Stock May Endure A Rough 2019 According to Equity Research Firm


This past year wasn't kind to Facebook and its investors. The primary story of the year was the huge 'Cambridge Analytica' scandal that rocked the social media giant. Head over here for our coverage.

That day Facebook stock's market cap was slashed by over $30 billion.

Facebook Has Blocked News Sharing on All Its Platforms in Australia

Share prices did recover well into July - only to plummet yet again after an awful earnings release, this time by over 20 percent, good for a loss of $120 billion in market capitalization. That earnings statement, second quarter of 2018, saw management revising guidance down on the back of limited growth and that spectre still haunts the firm to this day.

Since then its been a downward trend for FB (NASDAQ:FB), prices are currently down over 38 percent.

Facebook at risk for a 20% slide according to well known analyst

Today a well known Facebook-bear, analyst Brian Wieser of Pivotal Research Group, affirmed a very strong "sell" rating at the stock with a price target of $113 (down from his previous PT of $125). This is down almost 20 percent from today's closing price of $138 a share.

While Wieser isn't exactly known for his optimism in regards to Zuck & Co., he does go on to provide his reasoning for the downgrade.

Tim Cook Criticizes Facebook Business Model, Says it Could Lead to Polarization and Violence

According to the analyst, "The list of problems the company is grappling with is vast, including complicity in genocide, enabling social and political instability in different countries around the world, the unwitting sharing of consumer data and antagonized legislators in the US, the UK, Europe and beyond."

It's important to note that most in the financial analyst community are bullish on Facebook's outlook for the year. 41 analysts currently have a "buy" rating for the company, 8 have issued a neutral hold rating, and 4 - including Wieser - have a "sell" rating. Weiser's is currently the lowest price target of them all.

However, Pivotal Research Group and Wieser really only list circumstantial and historical items when it comes to Facebook. Every day the scandals of last year become more distant and some recent reports put Facebook on a generally upward trend in terms of user engagement, especially its wholly owned Instagram platform. Should Zuckerberg trot out a solid earnings beat and solid future guidance with its upcoming fourth quarter statement then it will quickly silence bears like Wieser. As noted above, concerns and doubts continue to swirl as to Facebook's ability to show positive growth while maintaining or improving margins. Tech, in general, has enjoyed a mini-rally the past week or so and Facebook hasn't quite kept up. Many investors likely need to see proof before they buy.

Keep your eyes peeled here as we'll have same-day coverage of Facebook's financial earnings release later this month.

The author has no position in any of the stocks mentioned. NewAgeAds LLC has a disclosure and ethics policy.