It’s been 40 days since Facebook’s (NASDAQ:FB) IPO, and this means the company’s 33 underwriters are legally allowed to put out research on the stock (that’s because the “quiet period” has expired). Unfortunately, the consensus is a bit muted. And so far in today’s trading, Facebook’s shares are off by about 1% to $32.70, and still down some 14% from its $38 IPO price.
True, the analysts think the company is a standout operator. With over 900 million users across the world, it has tremendous potential for becoming an incredibly valuable platform for advertisers.
However, the analysts also pointed out that Facebook must deal with the transition to mobile traffic. While this is positive for the long term, it will probably mean a deceleration in revenue for the next year or so. The reason: Budgets for mobile advertising are still in the nascent stages.
What’s more, analysts are also concerned about Facebook’s valuation. According to The Wall Street Journal, the consensus on the target stock price is about $38 (for the next 12 months).
Of course, some estimates are outliers. Susquehanna International Group’s Herman Leung has put out a target of $48. Then there’s Bernstein Research’s Carlos Karjner, who thinks the stock will plunge to $25.
But perhaps the most interest report came from Morgan Stanley (NYSE:MS). During IPO roadshow, the firm’s analysts got updated guidance on Facebook’s second quarter from an executive. Basically, it involved a lowering of expectations because of the shift to mobile.
OK, so what’s Morgan Stanley’s take on the stock now? Its target is $38.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of the upcoming book How to Create the Next Facebook: Seeing Your Startup Through, from Idea to IPO. Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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