Facebook Stock: This Dip is a Great Opportunity

Posted On November 9, 2017 3:09 pm

Facebook Inc (NASDAQ:FB) is trading in the red after the company started feeling the heat amid its alleged involvement in selling controversial political ads to the Russians during the US presidential election of 2016. The stock is also down amid Mark Zuckerberg’s announcement to sell up to 70 million shares of Facebook stock. But we believe the current dip is an excellent buying opportunity, as Facebook’s fundamentals remain strong.

Facebook-owned Instagram recently reached the 800 million user milestone. In the second quarter of this year, Facebook’s mobile ads revenue increased by a whopping 53% year over year. The company excels in monetizing its gigantic user base. Facebook has close to 2 billion monthly active users.

But it should be kept in mind that Facebook’s ads revenue growth is decelerating. In the first and second quarter of this year, Facebook warned investors that ads growth will be slower than expected.

But Facebook plans to resume its growth with video content. The company has also started monetizing WhatsApp, which has over 1.3 billion monthly active users.

Recently, Chaim Siegel of Elazar Advisors LLC said in a program that Facebook stock will double in the next 12 months. Siegel based his thesis on several factors. First, Facebook’s number of users grow about 17% every quarter on average, which is an incredible growth and beats all social media companies. The analyst also said that Facebook ads pricing is increasing every quarter, while Google’s ads prices are coming down rapidly. Advertising pricing shows the costs advertisers are ready to pay to have their ads placed on the internet.  Siegel also said that data is Facebook’s biggest strength, as users put all of their data on their profiles, and advertisers love social platforms which give them access to user data and their interests.

Small businesses cannot imagine their existence without Facebook. According to a report, about 60 million small businesses have a Facebook page. Almost 40% Facebook users like or follow pages for special offers and updates. Nearly 32% of the total Facebook users interact with brands regularly. People don’t “interact” or engage with brands in the real world. Facebook has given businesses an ability to keep their customers in touch with them.

Related: These 4 Factors Make Microsoft a Strong Buy


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