Facebook Inc (FB): Virtual Reality Becomes Reality


Facebook Inc (NASDAQ:FB) went out shopping and came back with a virtual-reality headset company, Oculus VR. The company spent $2 billion in order to acquire technology that fits perfectly in a world where people spend the most amount of time interacting digitally. In light of the news, Raymond James analyst Aaron Kessler maintained his BUY rating and $71 price target saying, “While Occulus has primarily focused on the gaming industry to date, Facebook plans to expand the Occulus technology to several new verticals, including communications, media & entertainment, and education.” Aaron acknowledges that there is no short-term gain for Facebook, but he likes, “Facebook’s forward thinking strategy as it positions itself for the platforms of the future.”

Aaron’s Facebook Inc (NASDAQ:FB) guidance is backed with a history of recommending the company’s shares, earning him a 60% success rate of Facebook recommendations. While he hasn’t seen positive results every time, when Aaron’s recommendations were correct he experienced high returns. Let’s take a look at some of Aaron’s most successful Facebook recommendations in this week’s Flashback Friday.

Recently, Aaron recommended BUY Facebook Inc (NASDAQ:FB) in January 2014, and raised his price target from $63 to $71. After Q4 results were released Aaron noted, “We maintain our positive view on shares given: 1) our expectation for continued strong advertiser demand, especially for mobile; 2) solid engagement trends to continue; 3) our view that estimates remain conservative.” Aaron picked up on the company’s ad revenue acceleration, as well as an increase in mobile ad revenue. This recommendation earned Aaron +11.2% over S&P-500.

Earlier in January, Aaron also saw a positive outcome to his BUY Facebook Inc (NASDAQ:FB) recommendation. Aaron was able to speak with a leading Facebook SPMD (strategic preferred marketing developer), who shared some insightful information: “The SPMD indicated that ad spend increased 28% q/q (vs. ~15% q/q in 3Q). For 4Q we have modeled ~18% q/q ad spending growth for Facebook. While we believe the SPMD’s spend growth is likely to be higher than the reported number, we do expect Facebook to generate upside to our/consensus revenues estimates. The SPMD noted strength across all verticals and pointed out particular strength in mobile app install ads and unpublished page post ads. According to the SPMD, mobile represented 48% of spend, which marks an increase from mid 40s in 3Q.” Aaron’s keen perspective on Facebook’s future helped earn him +9.6% over S&P 500 (INDEXSP:.INX).

In August of last year, Aaron maintained his STRONG BUY rating, using positive metrics to support his advice. Aaron noted, “the positive metrics established during the second quarter are holding steady in the current quarter.” Aaron also mentioned that, “Facebook is grabbing market share from ad networks or exchanges while also benefiting from offline to online brand advertising shifts.” This recommendation ended up earning Aaron +35.3% over S&P-500!

And Aaron’s July Facebook Inc (NASDAQ:FB) recommendation earned him an even higher return. Before Q2 results were released, Aaron recommended BUY Facebook with a $37 price target. “We maintain a positive bias on Facebook shares headed into 2Q results on Wednesday given our expectation for upside to consensus advertising estimates driven by Facebook’s recent monetization efforts, including newer ad formats, increased ad load, and mobile demand.” Even though there was still some uncertainty about user engagement concerns, Aaron ended up with +43.8% over S&P-500.

When his recommendations were successful, Aaron saw high returns, but Aaron has seen a few losses, including a -8.0% loss from his latest recommendation in February. Following Facebook Inc (NASDAQ:FB)’s acquisition of WhatsApp for $19 billion Aaron noted, “While clearly a large acquisition (represents ~10% of Facebook’s market value), we believe the acquisition is an important long-term strategic acquisition for Facebook as: 1) it adds a global leader in mobile messaging; 2) WhatsApp is complementary as it is more real-time messaging than Facebook’s current Messenger/Chat products; 3) the acquisition helps target the younger generation that is often more engaged with messaging apps vs other social platforms.” And while right now Aaron is not seeing the results he wants, there is still time for the stock to turn around.

To see if Aaron’s latest BUY Facebook Inc (NASDAQ:FB) recommendation is one of his high return winners, download TipRanks, and start making informed decisions with advice you can trust.

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1 Comment on "Facebook Inc (FB): Virtual Reality Becomes Reality"

  1. Who is Aaron?. Any ways. Whatsapp acquisition may also show FB is loosing users and hiding or else why should it invest so much (every company will justify buy as long term strategy so i cant really take it). Rather that taking blindly what fb says, we should analyze what its real worth. If Fb cannot replicate whatsapp, is it really in that a bad shape. It is advising marketers to market on fb, but was it not capable to make and market its own product like messenger?, and was it all lie that it is not loosing younger users?. if is a lie, does it not know that the polices are different and every move is gonna push people out of whatsapp, and without a move fb cannot gain anything out of it. Especially when competitive apps are popular. There are many angle than just plain recorded statement many company say. Does it really justify 19 billion. FB has no answers for loads of questions. As i always believe, ALL that glitters are not gold. To Me, FB is surely wasting money, if not, there is some thing really fishy about it.

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