Facebook's $162 Price Target Reaffirmed By Goldman Following Miscalculations

Goldman Sachs maintains its Buy rating and $162 price target on the shares of Facebook Inc FB, which disclosed more errors in performance metrics it provides to advertisers and publishers.

The new revelation comes after the Wall Street Journal reported in September that the social media giant overstated video views by 60–80 percent.

Issues Highlighted

On a November 16 update, Facebook revealed:

1. “The dashboard view on the number of page views has been overstated by 33 percent (for 7-day summary) and 55 percent (for a 28-day summary) on average.”
2. “Completed video views (‘video watches at 100 percent’) were actually understated by 35 percent on average.”
3. “Time spent on Instant Articles was overstated by 7–8 percent on average.”
4. “App referrals were overstated by 6 percent on average for power users.”

But, Facebook is working with third parties Moat, Nielsen, IAS and comScore to fix these issues.

Goldman's Analysis

“This news does not change our view that Facebook is in a strong position to increase share of ad dollars as they shift online and to mobile,” analyst Heather Bellini wrote in a note.

Goldman’s checks found that advertisers and ad agencies weren’t surprised by miscalculations, as they do their own measurement studies for ads placed on Facebook as well as Google, parent company Alphabet Inc GOOG GOOGL.

“That said, we think transparency and trust is critical for FB to have with its customers, especially given the large portion of ad budgets FB now represent,” Bellini continued.

“We expect third party measurement to be relied upon more by advertisers and believe that FB may need to become a greater enabler of third-party measurement than it has in the past,” Bellini added.

Shares of Facebook closed Wednesday’s trading at $116.34.