JPMorgan’s New Flip-Flop on Facebook’s Stock
J.P. Morgan analysist Doug Anmuth is out with a bull case for Facebook’s (NASDAQ:FB) stock: in a report published this morning, he predicted the social media stock will be worth $30 per share, a 66 percent increase from what the stock is trading at this morning. Although when he first recommended the stock in June, Anmuth listed Facebook as “overweight” with a price target of $45 per share. So, let’s take this new recommendation with a major grain of salt.
Anmuth still believes Facebook’s ad strategy works. In his estimation, profits stemming from mobile ads and Mark Zuckerberg’s sponsored stories will amount to $1 billion in 2013. Not bad if Facebook actually gets there.
Anmuth’s analysis of the stock is based in more than hard numbers. “As the underlying social fabric of the Web,” he said in his report, “Facebook is a unique platform asset with stront network efects, a deep competitive moate, and unparralleled social context.” Blah, blah, blah. We’ve heard the “hope and hype” story since the IPO, and to date that’s provided a massive drop from $45 to $18 per share.
Yet if hard numbers do play out how Anmuth forsees and Facebook reaches $30 per share, Anmuth predicts the company would trade at the same 15x multiple investors assign to Amazon (NASDAQ:AMZN). At least that’s more realistic than praying people will cough up the IPO 75x multiple.
Now that you know what Anmuth thinks, check out our more objective analysis of Facebook’s stock >>