Market Overview

Munster Says Still 'Neutral' On Facebook's Long-Term Outlook Despite Impressive Q1 Results

Munster Says Still 'Neutral' On Facebook's Long-Term Outlook Despite Impressive Q1 Results

Loup Ventures Managing Partner Gene Munster on Wednesday said Facebook Inc.'s (NASDAQ: FB) results are impressive in the short-term, but he still doesn't see the company favorably in the long-term.

What Happened

The social media company earlier in the day reported a 17.6% uptick in sales and 11% in daily active users in the first quarter compared to a year ago. The earnings per share were 9.5% lower at $1.71.

"What they have shown in the near-term is powerful," Munster told CNBC.

"But I think long-term, investors should think about what are the types of businesses that can be trillion dollar type of companies. And this of course is an advertising business."

"I am still neutral," the former research analyst said on maintaining Facebook's long-term outlook.

According to Munster, Facebook will have to "change the world beyond...advertising" for long-term growth.

One area where he sees potential for Facebook is in virtual reality and augmented reality. "That's the real fundamental piece here," Munster noted.

The Loup Ventures co-founder also credited Facebook for a bounceback at the stock market. The company's shares closed as low as $146.01 in mid-March as the novel coronavirus (COVID-19) pandemic brought concerns over its advertising revenue.

"As someone who isn't a firm believer in their mission, this bounceback is impressive," Munster said.

Price Action

Facebook shares jumped 10.5% in the after-hours session on Wednesday after closing the regular session 6.2% higher at $194.19.


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