Market Overview

2 Pros Talk Facebook Earnings

2 Pros Talk Facebook Earnings

Heading into Facebook, Inc. (NASDAQ: FB)'s second-quarter earnings report Wednesday, the market had "emphatically voted" that prior privacy scandals had passed, according to Exponential ETFs' Josh Blechman.

The Pros

Blechman, director of capital markets at Exponential ETFs, and Chad Morganlander, portfolio manager at Washington Crossing Advisors, discussed Facebook's stock on CNBC.

Facebook 'A Victim Of Its Own Success'?

Facebook's stock continued to hit new all-time highs before Wednesday's earnings report amid expectations for another quarter that signaled a "limitless growth" story, Blechman told CNBC Wednesday evening. Exiting the report, the narrative is "definitely put on hold," he said, as Facebook said it now expects to see slower revenue growth from business shifts that include the types of ads it will accept.

Facebook's stock tumbled after the print, and the company may be a "victim of its own success," Blechman said.

The Street priced in expectations for another quarter of impressive growth, and the Street will likely debate if "Facebook is overvalued at this particular point," he said. Even after the immediate selloff in reaction to earnings, Facebook's stock is still trading above the lows seen in reaction to the Cambridge Analytica privacy scandal — so investors shouldn't be surprised if the stock continues to "retreat further from here," Blechman said. 

Related Link: Social Media, FANG Stocks Taking A Big Hit In After-Hours Trading

Morganlander: 'Trim Back' Facebook

Growth investors were encouraged to "trim back" their Facebook holdings before the Q2 print in favor of "large-cap value" and "boring" stocks like Oracle Corporation (NYSE: ORCL) and Cisco Systems, Inc. (NASDAQ: CSCO), Morganlander told CNBC Thursday morning.

The social media giant remains a good company, but the stock is "priced for perfection," — so any signs of deceleration, whether in revenue or earnings, is a clear sign to shift investment dollars elsewhere, Morganlander said. 

Facebook's stock "shot to the moon" in the weeks prior to the report, so the large sell-off could be seen as a "valuation issue" and not an indication of a larger systematic issue across the broader technology sector, the portfolio manager said. 

Price Action

Facebook shares were sliding 19.39 percent to $175.33 at the time of publication Thursday.

Latest Ratings for FB

Nov 2019UpgradesOutperformBuy
Oct 2019MaintainsHold
Oct 2019MaintainsOverweight

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: Cambridge Analytica Chad Morganlander CNBCAnalyst Color Earnings News Analyst Ratings Media Best of Benzinga


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