Market Overview

Gene Munster: Facebook's Valuation Is Reasonable, Oculus Going To Be 'Big Deal'


Shares of Facebook Inc (NASDAQ: FB) are hitting all-time highs on rumors that the Chinese government may end its ban on the social networking site, in addition to the company launching payment services on its platform. Piper Jaffray analyst Gene Munster was on CNBC Monday to talk about the company's payment service and valuations.

Building Engagement

"On the payment side is, it's just about building engagement. So, they announced this last week about being able to really, mostly it's going to be sending money to friends," Munster said.

"I am sure a lot of college kids will love it if their parents send them money, but I think the real core use case is: you had dinner; you are sharing a kind of tab. So that's the use case for it. They don't charge for that, and so really, what they want to do is build engagement."

Related Link: Facebook Is Killing It, Even Without Instagram And WhatsApp

He continued, "And I think that's kind of one of the big themes that's going to emerge this week is a shift in Facebook from being a platform of $1.4 billion users, they can do a lot of different things like payments, to more of a platform where they can find different ways to monetize it. So, initially on the payment side, they are not going to make a ton of money, but over time they'll just monetize the broader platform."

Valuation Is Reasonable

Munster was asked if Facebook's valuation seems reasonable to him. He replied, "It does. I mean, if you look at the growth rate last quarter, they grew at 55 percent. This year, the Street is looking for them to go around 30 percent. That number is probably a little bit low. The reason why market cap can be so big is that this story has some huge catalysts.

"This year, it's pricing that's been working to their advantage. Next year Instagram. They are not going to monetize Instagram this year, that's really 2016. WhatsApp is after that. And then this Oculus thing, which we talk a lot about, but most people don't talk much about. But this thing is going to be big deal as far as augmented reality part of the story," Munster concluded.

Latest Ratings for FB

Feb 2020Pivotal ResearchDowngradesHoldSell
Jan 2020OppenheimerMaintainsOutperform
Jan 2020B of A SecuritiesReiteratesBuy

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: CNBC Gene Munster Instagram Oculus Piper JaffrayAnalyst Color Analyst Ratings Media


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Latest Ratings

GRPNMorgan StanleyMaintains1.5
HMSYCantor FitzgeraldReiterates33.0
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