Market Overview

Nomura Instinet Upgrades Facebook, Says More Regulation Will Be 'Net Positive'

Nomura Instinet Upgrades Facebook, Says More Regulation Will Be 'Net Positive'

Nomura Instinet upgraded Facebook, Inc. (NASDAQ: FB),  saying the social media platform is transitioning to its new “Stories” format faster than originally thought.

Nomura had downgraded Facebook to Neutral last year, with the sell-side being unconvinced at the time that the new format would come along as quickly as market bulls were expecting. Conversations with company officials and at industry point to Stories being ready sooner, lessening concerns about Facebook.

Stories — rather than the traditional scrolling Facebook feed — are likely the future focus for the company, founder Mark Zuckerberg said on a conference call with journalists back in the fall. 

In the Stories format, Facebook users can share photos or videos with friends or followers, but they disappear after a day rather than remaining archived as part of the user’s feed. The idea is similar to how Snapchat presents its posts. 

The Analyst

Nomura Instinet’s Mark Kelley upgraded Facebook from Neutral to Buy and boosted the target price from $172 to $215.

The Thesis

In addition to its faster-than-expected adoption of Stories as a platform for delivering advertising messages to users, Facebook is also showing better user engagement trends, Kelley said in the Monday upgrade note.

The stock is a good value right now, the analyst said. 

Facebook reported earnings last month that some analysts said were a "blowout," and also touted the addition of 4 million new European users and 1 million new ones in North America , bucking the narrative of late that people are leaving the platform. 

Regulation A Positive? 

Kelley also presented the slightly contrarian notion that the possibility of more regulatory scrutiny for big internet and social media companies in the wake of criticism over privacy issues and “fake news” concerns could actually benefit Facebook.

If regulation eases public concerns, it could help prevent loss of users, he said — but Kelley also noted that the negative impact from news coverage may have already run its course.

“We continue to believe that increased regulation will be a net positive for large platforms like FB, though there could be some headline risk in the near-to-medium term,” the analyst said. “On the whole, we do think the negative headline headwinds have largely been exhausted, with little reaction to negative press as of late.”

Price Action

Facebook shares were up 2.03 percent at $173.04 at the time of publication Monday. 

Related Links:

One User Statistic Facebook Needs To Be Wary About

PwC Exec: Biggest Threat To Banks May Come From Large Tech Firms — Not Fintech

Latest Ratings for FB

Jun 2019MaintainsBuy
Jun 2019UpgradesNeutralBuy
May 2019Initiates Coverage OnBuy

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: Mark Kelley Nomura Instinet social mediaUpgrades Top Stories Analyst Ratings Best of Benzinga


Related Articles (FB)

View Comments and Join the Discussion!

Latest Ratings

View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
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.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
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

Zynerba Pharmaceuticals Adds Autism, DiGeorge Syndrome To Pipeline

RayJay Drops Bearish THL Credit Stance As Company Cuts Dividend, Management Fees