Facebook (FB +1.81%) is back to being an underappreciated, busted IPO. Two analysts in two days have talked down the leading social networking website operator.
Yesterday it was Bernstein Research's Carlos Kirjner downgrading the shares and slashing his price target from $33 to $27. He's left unimpressed by the company's 18% increase in ad rates over the past year. He also feels that the mobile advertising upside has already been baked into the stock and analyst estimates.
Today it's BTIG Research's Rich Greenfield checking in with a gloomy sell rating and a frightening $22 price target. Greenfield's model shows lower revenue and EBITDA projections than his peers through the next three years, and that's factoring in the boom in mobile growth at Facebook and inevitable ad initiatives.
The engagement of mobile users remains a popular sticking point with most worrywarts. Cynics just don't get it. Haven't they seen the Facebook Dollar Store?
Bucking the trend
Surfing through Facebook earlier today I was offered the opportunity to buy a boxed heart-shaped cookie for my wife. The site may have been guessing about my wife liking butter-cream frosting, but it obviously knew that she was my wife. It naturally knows that Valentine's Day is around the corner.
The simple gift cost just a buck, shipping included. It seemed too good to be true, but the merchant knows what it's doing. It's establishing a marketing connection, and including a bonus $5 gift card with the $1 gift will increase the chances that my wife or I will lean on them in the future -- if the cookie's good.
Checking out was seamless, and the default option of having the gift appear on her timeline -- as a gift-wrapping graphic that she can virtually peel away as soon as she confirms her shipping address -- was brilliant as a viral touch. As soon as I checked out, I was reminded of six friends and family members that have birthdays coming soon.
Facebook Gifts launched to little fanfare late last year. Your local mall didn't quiver in fear. Amazon.com (AMZN +0.26%) went on to hit new highs. Nobody's afraid of a $1 delivered cookie or the other buck items with free shipping that currently include chocolate "Be mine" lollipops, champagne gummy bears, or honey-infused jelly beans.
Just wait.
Just wait until more of the gift items start showing up on timelines. Just wait until Facebook collects more credit cards.
Just wait.
Facebook has the advantage of knowing not just its shoppers but its recipients. Try as Amazon might, it will never get there. Try as your local mall might, it will never get there.
Facebook may be losing two more analysts but it may be gaining more cheap gift seekers like me in the near future. In the end, that may be more important.
