Friday, January 28

Facebook climbs into double digits in its worst year after Cambridge Analytica. Reputation doesn’t matter

Facebook In 2021 he is experiencing another catastrophic year for his reputation that, however, will not prevent him from closing with a rise of up to 30 percent in its stock price. From the Cambridge Analytica scandal, the social media conglomerate hadn’t been in such a hard time. These even forced to sacrifice the brand to adopt Meta’s.

The company of Mark Zuckerberg began the year surrounded by controversy over its presumably facilitating role in the organization of those accused of invading the US Capitol on January 6. And as the months went by, many of the criticisms that have always been associated with Facebook’s social networks were confirmed.

The former employee of the company, Frances Haugen, leaked documents to the press in October that proved internal knowledge of the damage caused by platforms such as Instagram and Facebook itself to the health of adolescents, or by spreading disinformation around the world.

But as if this were not enough, the company suffered that same month a blackout of up to 5 hours in all its social networks that caused losses in its price of 5 percent.

Despite all these incidents and a name change, to be renamed Meta, which was received with some skepticism, Facebook shares began the year trading at $ 268.96, and on December 28, 2021 they are at $ 346.18, marking a rise of 28.72 percent, which still has margin improvement.

Goal: $400 for Goal

The highest price of Facebook in its history was registered on September 10, 2021, when its titles reached a value of $ 378.69. He subsequently lost to the pressure of a lousy October, described above.

The consensus of analysts, however, considers that the US company can beat that mark 12 months from now, giving it a target price of $ 399.58 that would imply an increase of 15 percent compared to its current price.

Of the 62 experts who have issued an opinion on the company’s securities, in addition, 52 maintain buy recommendations or overweight, trusting in the growth capacity of Facebook despite the controversy that surrounds it and the fact that its decided bet because of the metaverse it can take years to report earnings.

Meta accelerates the adoption of the metaverse

Investments of about $ 10 billion made by Facebook, both this year and in its forecast for 2022, will serve to support its aggressive turn towards metaverse construction, but could hamper the company’s operating margin by at least 10 percentage points, explain to desde Bloomberg Intelligence.

The company, however, sees positive signs in its effort to bring the metaverse closer to more and more people.

According to CNBC, the company’s vital reality app, Oculus, was the most popular app in the Apple Store during Christmas day; a sign that could indicate a good sales figure for the company’s virtual reality device during these holidays.

According to Bloomberg Intelligence, Facebook could also try to subsidize the sales of its headphones Quest to drive this widespread adoption of virtual reality and accelerate the development of applications and partners in an ecosystem that has set to dominate in the coming years.

Another option for Facebook, while it materializes its commitment to the metaverse, is to spin off some of its businesses, including WhatsApp, Instagram and Oculus itself, copying the steps already taken by a Google that in its transformation towards Alphabet he was able to clearly separate his lines of business and investments.

Meta’s businesses: stronger separately

“Meta (Facebook) could unlock greater business value if it spun off any of its businesses,” they say from Bloomberg Intelligence.

“According to our analysis, the contribution of Facebook’s main application has dropped to about 30 percent, while the long-term outlook for Oculus looks brighter,” notes the same source. It adds that WhatsApp’s monetization is uncertain despite its 2 billion “highly engaged” users.

In this same report, it is highlighted that one of the assets with the greatest weight for Facebook is Instagram, which could obtain a valuation of 600,000 to 650,000 million dollars if Facebook decided to split its listing, offering a price index with respect to sales that would be around 9.5 times, compared to 4.7 times for Facebook as a whole.

Similarly, Bloomberg Intelligence estimates that Oculus’ valuation could exceed 5 billion in 2023 if sales of virtual reality devices continue their upward trend, thanks to which Facebook has outperformed its closest competitors by about nine points.