Market Overview

Facebook's Q4: Were News Feed Fears Overblown?

Facebook's Q4: Were News Feed Fears Overblown?
Related FB
5 Books That Inspired Steve Jobs, Bill Gates And Other Billionaires
How One Entrepreneur Built A Cannabis Business And Sold It For $7M In Less Than 2 Years
The Profitable FANG+ Stock Anomaly Continues Into The 8th Iteration (Seeking Alpha)

Despite notable changes to the platform's news feed, Facebook Inc (NASDAQ: FB)'s investors have little reason to be concerned, according to William Blair. 

The Analyst

William Blair's Ralph Schackart maintains an Outperform rating on Facebook's stock.

The Thesis

Facebook's CEO Mark Zuckerberg may have initially surprised investors with an announcement of changes to the news feed on the core Facebook app, Schackart said in a Wednesday note. (See the analyst's track record here.) 

The news feed will become optimized for "time well spent" and focus on content that drives participation, rather than passive content, according to Facebook. 

During Facebook's post-earnings conference call, the company confirmed that changes began last quarter, which may have contributed to a 50-million-hour decrease in time spent on the platform, Schackart said. While this does amount to a decrease in time spent on Facebook daily by 5 percent, the company's longer-term goal is to encourage more interaction among users, which will strengthen the business over time, the analyst said. 

Facebook's daily active users, or DAUs, and monthly active users, or MAUs, did fall short of the Street's estimate in the quarter, but this shouldn't be seen as a concern, Schackart said. The global DAU/MAU metric, used by many investors as a proxy for engagement during the quarter, fell just 20 basis points from the prior quarter to 65.8 percent and remains in-line with recent quarters, he said. 

Over the next year, Facbeook is expected to post upside to the Street's estimates, potentially as a result of management's conservative expense guidance, according to William Blair. Assuming a 15-percent upside to the Street's EBITDA forecast, Facebook's stock would be worth nearly $220 per share, Shackart said. 

Price Action

Shares of Facebook were trading higher by 3.71 percent at $193.83 at the time of publication Thursday morning. 

Related Links:

AMD, Facebook, Square, IBB: 'Fast Money' Final Picks For February 1

7 Stocks Moving In Wednesday's After-Hours Session

Photo from Wikimedia. 

Latest Ratings for FB

Dec 2018GuggenheimInitiates Coverage OnNeutral
Dec 2018Stifel NicolausDowngradesBuyHold
Nov 2018ArgusMaintainsBuyBuy

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: Facebook DAU Facebook MAU News Feed Ralph Schackart social mediaAnalyst Color Reiteration Analyst Ratings Best of Benzinga


Related Articles (FB)

View Comments and Join the Discussion!

Latest Ratings

View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

The BLCN Blockchain ETF Hits $100 Million Milestone

Would You Crowdfund Your Mortgage Down Payment?