Facebook: Still A Buy After Recent Whistleblower & Outage Pressures
(Preview) Company Update (FB US) (Buy)
Summary
Facebook stock has fallen 13% since August after a series of bad news, but we believe the long-term investment case is intact.
Whistleblower Frances Haugen alleged that Facebook knowingly harms teenagers' mental health and politics and is losing young users.
However, even her leaked documents show Instagram's strength with young users, and the remedies to her other claims are manageable.
Apple's anti-tracking changes are a risk, but we believe Facebook's scale and technology will allow it to continue adapting and growing.
With shares at $330.05, we expect an exit price of $560 and a total return of 70% (17.8% annualized) by 2024 year-end. Buy.
Introduction
We review our Facebook investment case after shares fell 13.0% since the end of August, following a series of high-profile negative news stories.
We initiated our Buy rating on Facebook in May 2019. Even after the recent correction, FB stock has gained 92.7%, including 20.8% year-to-date.
We believe that, while some of the adverse pu…