Skip to main content

Market Overview

Analyst Downgrades Facebook To Sell, Sees Risks Ahead

Analyst Downgrades Facebook To Sell, Sees Risks Ahead

Facebook Inc (NASDAQ: FB) shares, which gained a little over 4 percent in two sessions and moved into record territory following the release of its second-quarter results on July 26, came in for some punishment on Monday.

Pivotal Research Group downgraded Facebook from Hold to Sell and maintained its year-end price target of $140.

Analyst Brian Wieser attributed the action to the stock's remarkable runup this year and the current market price remaining about 19 percent over his target price as of last Friday.

The analyst highlighted several risks that make him wary about Facebook.

The analyst sees abouding macroeconomic uncertainties, especially concerning public policy issues in the U.S. and many countries around the world.

See Also: Facebook's Revenue Growth Rate 50x That Of Twitter

Potential EC Clamp Down

Additionally, the analyst sees the likelihood of regulatory clamp down on Facebook, as it gets bigger. Pointing to European Commission's ruling on Alphabet Inc (NASDAQ: GOOGL) shopping, the analyst looked ahead to EC's soon-to-be-announced consumer privacy policy rules, which would be implemented in May 2018.

The analyst referred to expectations from some quarters that the rules could be negative for both Google and Facebook due to the limitations the policy would impose on how both companies collect consumer data and use them for ad targeting.

Other Risks

  • Viewability remaining a concern for Facebook
  • Digital advertising spending inching closer to saturation
  • Lower margins associated with premium video despite it aiding growth
  • Companies such as Procter & Gamble Co (NYSE: PG) indicated that they aren't happy with spending on digital forums, as their ads are not being placed according to their specification and standards. Pivotal estimates that large advertisers account for around 30 percent of Facebook's revenues. Any cut by these clientele would impact revenues.

Concluding, Pivotal said, "if anything, risks have become more pronounced since our peak YE2017 price target of $176, which was issued in early November of 2016 and subsequently reduced."

"We don't think that investors are fully accounting for those risks."

Latest Ratings for FB

Feb 2021Loop CapitalMaintainsBuy
Jan 2021BMO CapitalMaintainsOutperform
Jan 2021MKM PartnersMaintainsBuy

View More Analyst Ratings for FB
View the Latest Analyst Ratings


Related Articles (FB)

View Comments and Join the Discussion!

Posted-In: Brian Weiser PivotalAnalyst Color Downgrades Analyst Ratings Best of Benzinga

Latest Ratings

FSRMorgan StanleyMaintains40.0
MEDDA DavidsonMaintains302.0
VICRBWS FinancialMaintains120.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at