Analyst Moves Push eBay and Facebook in Opposite Directions

Major indexes continue poor 2014 performance.

Jan 6, 2014 at 9:00PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

After today's declines -- in which the Dow Jones Industrial Average (DJINDICES:^DJI) lost 44 points, or 0.27%, the S&P 500 fell 0.25%, and the Nasdaq declined 0.44% -- 2014 has started off as quite the bearish year. After three days of trading, the Dow is down 151 points, or 0.91%, while the S&P 500 is off 21 points, or 1.16%, and the Nasdaq is down 62, points or 1.5%. Investors need to remember that sentiment can change quickly on Wall Street, and just because we had a great year in 2013, that doesn't guarantee a good one in 2014.

As Fools know, thinking long-term and considering a stock's potential for months and years, not just over a few days, is the best way to invest. But let's see why a few stocks made some big moves today, because the reason with our first company could change the direction the business heads in the future.

Within the Dow, Microsoft (NASDAQ:MSFT) closed the session down 2.11%, following a report from The Wall Street Journal indicating that both current CEO Steve Ballmer and former CEO and founder Bill Gates plan to stay on the Microsoft board for the foreseeable future. The news left many observers concerned that their continued presence could hamper a new CEO's independence. Gates and Ballmer have been the company's only two CEOs, and although they've brought the company a long way, Microsoft needs to change if it wants to stay relevant.  

Outside the Dow, a few analysts' ratings changes led to some big moves today. Facebook (NASDAQ:FB) got a price target increase from Morgan Stanley (NYSE:MS), whose analyst believes the senior social-media company has a clear edge against its competitors when it comes to attracting advertising dollars. Morgan Stanley maintained its "overweight" rating but raised its price target from $53 to $62. The analyst also believes that Facebook's ads and video-ad tests on Instagram are a sign of likely increased revenue in the future.  

Earlier this afternoon, I discussed why Morgan Stanley downgraded another social-media company -- Twitter. And the firm didn't stop there with its downgrades today: It also cut eBay (NASDAQ:EBAY) from "overweight" to "equal weight," citing valuation and risks in 2014 and 2015 sales and earnings estimates because of slowing trends in Omnichannel/offline initiatives. eBay and Amazon.com have built out their seller and retailer networks so quickly that they're nearly maxed out. That doesn't mean sales or earnings are being estimated to shrink in the coming years -- just that growth will slow.  

Whether you agree or disagree with these upgrades and downgrades, remember that they're just the opinions of a few analysts. It's always best to take a number of differing opinions into consideration before making a buy or sell call, and a Wall Street analyst shouldn't carry more weight in your investing decisions than anyone else.

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Fool contributor Matt Thalman owns shares of eBay, Facebook, and Microsoft. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter: @mthalman5513

The Motley Fool recommends eBay and Facebook and owns shares of eBay, Facebook, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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