Facebook (FB) Stock Woes: Shares Rise Slightly Despite Lukewarm Ratings and Drop in US Users
Facebook (FB) stock rose 3.14% on Tuesday to close at $33.10, as Wall Street firms were able to rate the stock for the first time since its IPO.
And the reviews are mixed as some firms described Facebook shares as "a buy" while others warned "cautious optimism" at the social network's long-term ability to capitalize on its growing mobile audience.
Goldman Sachs, one of the lead underwriters, was the most optimistic one rating Facebook “a buy” and arguing that “social platforms” are helping to usher in a new era on the web that Facebook “is poised to dominate.”
They rated the social network's stock price with a $42 12-month price target; while RBC Capital Markets, which held a similar opinion, rated Facebook with a $40 price target claiming the social network is “the leading social media destination in the world” and that its more than 900 million active users spend way more time on it than on the competition.
Morgan Stanley also jumped on the “it’s a buy!” bandwagon, rating FB with a price target of $38 and claiming the social network is well positioned to capitalize on its mobile growth.
Others, such as Barclays, Bank of America and Merrill Lynch, were less optimistic rating FB with a 12-month price target between $38 and $35; and warning about Facebook’s not deriving “any meaningful revenue” from its growing mobile usage.
In the meantime, a recent report from analyst firm comScore said that unique U.S. visitors to Facebook dropped slightly in May compared to April and March, suggesting the slowdown could be more significant and longer lasting.
Falling traffic could be a concern to investors, who justify Facebook's high market value by pointing to its growth potential. The research firm comScore said that the number of unique visitors was 158 million in May, down from 158.7 in April and 158.9 in March, which would represent a 0.6 percent drop. Tim Beyers, senior analyst at The Motley Fool investment site, said the news wouldn't necessarily keep him from buying stock, but "it would make me look at the growth strategy."
Nielsen data also suggests a drop. According to Nielsen's numbers, Facebook had 156.2 million uniques in November 2011, 152.8 million in March 2012, 151.4 million in April 2012, and 152.7 million in May 2012.