POLAND – 2020/03/13: In this photo illustration, a Facebook logo is displayed on a smartphone. … [+]
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With 2021 just around the corner, the relative strength of Facebook stock (FB) is diminishing as the threat to the company’s liquidation grows. The social network will face tough headwinds in the New Year, but it’s been proven that it can weather the storm after emerging from the high-profile but largely symbolic boycott of advertisers this summer with barely a scratch and even revenue in the third Quarter accelerated. Now is the time to buy Facebook shares?
What is Facebook stock worth?
All values from the last quarter reported, unless otherwise stated. Market data from S & P. … [+]
Facebook shares have a market capitalization of $ 764 billion, making them the fifth most important company in the S&P 500 index after Apple, Microsoft, Amazon and Alphabet. Facebook stock hit its all-time high of $ 303.91 on Aug. 26, although daily user engagement declined after an initial pandemic peak.
On Monday, FB shares opened at $ 268.74 and the average price for the past 52 weeks was $ 233.79.
Possible threats to Facebook’s existence
WASHINGTON, DC – JULY 29: Mark Zuckerberg, CEO of Facebook, says via video conference during a … [+]
On December 9, the federal government and 48 states and territories filed antitrust lawsuits against the company, alleging that Facebook may have been conducting the deals it did in purchasing Instagram and WhatsApp. After the lawsuits were filed, FB shares fell nearly 2%.
In what appears to be an attempt to shoot itself in the foot, Facebook has also decided that now is the time to chat with Apple about privacy issues that could hurt the golden goose of its advertising.
Is advertising all Facebook has?
One of the reasons for the fall of the Roman Empire was its over-reliance on slave labor. Should the Facebook empire fall, one of the reasons could be that it relies too heavily on advertising revenue, which currently accounts for around 99% of company profits. Both the beef with Apple and antitrust lawsuits could hurt Facebook’s ad revenue, but experts point to other catalysts that could boost FB shares in 2021.
ANKARA, TURKEY – MAY 21: The logos of Instagram, Facebook and Facebook shops can be seen on one … [+]
Assuming Facebook doesn’t have to sell Instagram (at least not right away), it could give investors a clear picture of Instagram’s growth potential as a social e-commerce platform by adding Instagram shops and guides. Along with Reels, Instagram is making an effort to stay relevant to Gen Z users and keep them from switching to TikTok and Snap.
Oculus Quest 2, the next generation of wireless all-in-one VR, was launched in September 2020.
Let’s not forget that virtual reality is the future because Facebook sure doesn’t have it. Research and Markets predicts that the global AR and VR market could grow at an annual rate of 42.9% over the next decade, and Facebook is able to do that with its Oculus Quest VR headsets for neither Phone still a phone are required to benefit from this PC trend. In May, the company announced sales of over $ 100 million worth of VR content, laying the groundwork for its VR platform, which may virtually connect users together in the future.
Wherever your moral is regarding Facebook’s (along with Google) monopoly in the advertising market, the fact remains that Facebook is too great a force for advertisers and investors to ignore, especially as we move out of the pandemic. Recession come out and advertisers start spending more.
After all, it’s too early to make strong predictions, but Facebook could generate future revenue based on its current cryptocurrency. On December 1, the Libra Association renamed itself the Diem Association with a planned value pegged to the dollar. Facebook hopes to launch its cryptocurrency in January.
What do experts say about investing in Facebook now?
Experts say meh. Despite the impending antitrust lawsuits, the analysts largely shrugged their shoulders at the possibility of a separation. They are either confident about Facebook’s future acquisitions or predict that Facebook would receive another fine rather than a forced split.
In addition, antitrust lawsuits do not take place within a few months. It took Microsoft three years from litigation to settlement, and the Justice Department antitrust case against Google won’t be brought to trial until September 2023. At least in the short term, analysts say investors don’t. You don’t necessarily have to worry about the breakup. On the flip side, some, like Investopedia employee Alan Farley, say Wall Street is asleep at the wheel and is focused on Facebook’s ad revenue rather than growing headwinds. Farley predicts a tough year with poor returns for 2021.
Some experts even argue that a possible separation might be good for shareholders who would receive shares in the separated entities. That way, investors could gain access to faster-growing, under-monetized Instagram and WhatsApp apps, two apps whose sales are expected to grow without dealing with Facebook itself, which is constantly in political trouble.
“Wall Street analysts believe this FANG stock has continued to grow and offers advertisers unmatched value. Facebook has stood the test of time in an unprecedented economic downturn, ”Jed Graham writes on Investors.com. Graham also points out that Facebook’s stock has an excellent IBD composite rating of 94. “All of this potential makes it dangerous to bet against FB stock, even if it’s a long cartel war. However, investors looking to bet on Facebook should wait for it to demonstrate its resilience again by reaching an appropriate buy point. “
The bottom line is, whether you’re bullish or bearish, it might not be the best time to buy Facebook stock, but if you do, get ready to play the long game.