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Facebook stock under pressure, but analysts see bright ads future

Facebook stock

Facebook (NASDAQ: FB) stock price has lost almost 5% of the value from 52-weeks high as the social media giant came under deep scrutiny due to the business practices. Traders have also been showing concerns over the ads growth because several big names like Walt Disney (NYSE: DIS) has slashed its online ad spending amid the slower business growth due to pandemic.

In addition, a large number of big companies have announced to cut Facebook ads, backing a boycott campaign to put pressure on Facebook for regulating more of its content.

 It has also rescheduled its second-quarter earnings amid conflict regarding an antitrust hearing.

The social media giant now plans to announce second-quarter earnings on Thursday. The CEO will be a part of the House Judiciary Antitrust Subcommittee meeting on Wednesday along with the chief executives of Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Facebook, and Google-owner-Alphabet (NASDAQ: GOOGL).

The slowest revenue growth is anticipated

The market analysts are expecting Facebook to report second-quarter revenue around $17.3bn, representing a growth of 2% from the past year period. This would also mark the slowest revenue growth in many years. Meanwhile, earnings expectations are high. The consensus estimate stands around $1.39 per share, indicating an increase of 52% from the earlier year period.

FB Facebook, Inc. daily Stock Chart
Facebook stock price performance. Finviz.com chart.

The Facebook stock price is currently trading around $233, up 13% year to date. Meanwhile, some market analysts are seeing further upside for the social media giant despite concerns over business practices and slowing ads growth.

Jefferies has provided a price target of $285 as the firm claims that Facebook has experienced higher than expected ads growth in the months of May and June. The firm sees robust online ads growth in the coming years for all key social media players.

“Ads spending improvement is accelerating,” analyst Brent Thill notes, saying spending trends will improve through the second half and digital ads should boost market share.

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Author

Siraj is a finance writer based in Saudi Arabia with a strong understanding of and passion for the stock market, cryptocurrency, economics, and finance. He has worked for international clients for many years on several projects related to the stock market, equity research, accounting, and finance. Siraj is a published financial analyst on some of the largest finance websites.