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Why Andrew Left and Citron Are Wrong About Facebook (FB) Stock
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Shares of Facebook are down about 2.5% Monday following the news that notorious short-seller Andrew Left, founder of Citron Research, was shorting shares of the social media giant.
Left and Citron have been right in the past, and their bets against GoPro (GPRO - Free Report) and Valeant Pharmaceuticals certainly seem to have paid off. In the case of Facebook, Left thinks that the company is “losing an extensive amount of relevancy,” CNBC reports.
Left’s comments come in the wake of a major shakeup in the social media world as Microsoft (MSFT - Free Report) announced this morning that it has purchased LinkedIn for a hefty $26.2 billion in an all-cash deal.
“[LinkedIn] was a monopoly in their respective space, whereas I see Facebook losing share to Snapchat and overstaying its welcome in other niches. I am not saying Facebook is a bad company [it] just will not be a $330 billion company in a year,” Left told CNBC.
In reality, Left’s comments come off as a short-seller trying to make a quick buck by stirring the pot. On the same day that he says Facebook is losing relevancy, the company announced a big change that will inevitably kick start its next major mobile application.
Beginning on July 7, the company will delete photos that its users have synced from their phones to a private album on Facebook. This method of backing up your photos is being replaced by a new Facebook app called Moments.
Facebook pulled a similar move with Messenger, forcing users to download the Facebook Messenger app in order to retain mobile chat functions. Frustrating as it may be to some, these types of moves work, and Facebook Messenger now has about 900 million monthly active users. Add that to Instagram’s 400 million users, WhatsApp’s 1 billion users, and Facebook’s 1.65 billion users, and it’s tough to visualize the company “losing an extensive amount of relevancy” anytime soon.
Let’s not forget that the numbers support Facebook as a great stock pick right now too. Over the past 60 days, we have seen six positive estimate revisions for the company’s current quarter earnings, as well as seven positive revisions for its full year earnings.
In the face of a volatile market, Facebook stock is up over 13% this year, and its long-term growth numbers remain solid. Revenues are expected to grow by 45.37% this year and 33.37% next year. Earnings are expected to grow 88% this year and 36% next year.
At some point, Facebook’s user growth will probably stall out, but users of other platforms like Snapchat don’t simply up and leave Facebook; they use both. Zuckerberg and friends have consistently proved their ability to cash-in on Facebook’s massive user base, and there just isn’t any actual evidence to suggest that will stop anytime soon.
Facebook remains a Zacks Rank #1 (Strong Buy) stock. Andrew Left and Citron Research are wrong.
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Why Andrew Left and Citron Are Wrong About Facebook (FB) Stock
Shares of Facebook are down about 2.5% Monday following the news that notorious short-seller Andrew Left, founder of Citron Research, was shorting shares of the social media giant.
Left and Citron have been right in the past, and their bets against GoPro (GPRO - Free Report) and Valeant Pharmaceuticals certainly seem to have paid off. In the case of Facebook, Left thinks that the company is “losing an extensive amount of relevancy,” CNBC reports.
Left’s comments come in the wake of a major shakeup in the social media world as Microsoft (MSFT - Free Report) announced this morning that it has purchased LinkedIn for a hefty $26.2 billion in an all-cash deal.
“[LinkedIn] was a monopoly in their respective space, whereas I see Facebook losing share to Snapchat and overstaying its welcome in other niches. I am not saying Facebook is a bad company [it] just will not be a $330 billion company in a year,” Left told CNBC.
In reality, Left’s comments come off as a short-seller trying to make a quick buck by stirring the pot. On the same day that he says Facebook is losing relevancy, the company announced a big change that will inevitably kick start its next major mobile application.
Beginning on July 7, the company will delete photos that its users have synced from their phones to a private album on Facebook. This method of backing up your photos is being replaced by a new Facebook app called Moments.
Facebook pulled a similar move with Messenger, forcing users to download the Facebook Messenger app in order to retain mobile chat functions. Frustrating as it may be to some, these types of moves work, and Facebook Messenger now has about 900 million monthly active users. Add that to Instagram’s 400 million users, WhatsApp’s 1 billion users, and Facebook’s 1.65 billion users, and it’s tough to visualize the company “losing an extensive amount of relevancy” anytime soon.
Let’s not forget that the numbers support Facebook as a great stock pick right now too. Over the past 60 days, we have seen six positive estimate revisions for the company’s current quarter earnings, as well as seven positive revisions for its full year earnings.
In the face of a volatile market, Facebook stock is up over 13% this year, and its long-term growth numbers remain solid. Revenues are expected to grow by 45.37% this year and 33.37% next year. Earnings are expected to grow 88% this year and 36% next year.
At some point, Facebook’s user growth will probably stall out, but users of other platforms like Snapchat don’t simply up and leave Facebook; they use both. Zuckerberg and friends have consistently proved their ability to cash-in on Facebook’s massive user base, and there just isn’t any actual evidence to suggest that will stop anytime soon.
Facebook remains a Zacks Rank #1 (Strong Buy) stock. Andrew Left and Citron Research are wrong.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>