Facebook, Inc. (Nasdaq: FB) stock had its worst day in history on Thursday, plummeting 19 percent after a horrible earnings report that suggested the social media giant’s growth may be slowing. Wall Street analysts don’t even seem to know what to make of Facebook’s downturn, with some recommending investors buy the dip and others telling them to stay away from FB stock.
No other stock in history has endured a larger one-day hit to its market capitalization than Facebook did on Thursday. Facebook’s market cap lost more than $119 billion of investor value on Thursday, shattering the previous one-day record of $90 billion in market cap lost by Intel Corp. ( INTC) in 2000.
[See: 7 of the Best Stocks to Buy for 2018.]
Facebook investors are now in the difficult position of deciding whether to cut their losses, hold on for dear life or add to their positions on the dip. Unfortunately, Facebook’s earnings miss and guidance cut seem to leave more questions than answers.
“With stagnating core user growth, we think there is too much near- to mid-term uncertainty to recommend shares at this point,” Nomura Instinet analyst Mark Kelley says.
Kelly downgraded FB stock from “buy” to “neutral” following the earnings report.
“There are several questions and moving pieces where we feel we need to gain some comfort and clarity before we can look to be positive on shares again,” he says.
Kelly says third-quarter earnings will be critical in determining whether or not user growth slowdowns in the Asia-Pacific and European regions in the second quarter are inflection points or simply one-time outliers. He also says Facebook investors need more clarity on when and how Facebook will monetize Instagram Stories and WhatsApp.
But even after the terrible report, Facebook still has plenty of Wall Street supporters as well. Morgan Stanley analyst Brian Nowak says investors shouldn’t count Facebook out just yet.
“FB has shown an ability to innovate/execute through previous challenges,” Nowak says.
However, he says Facebook has a lot of work to do before its next report.
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“We look to 3Q results for evidence of FB’s ability to monetize its core News Feed products and the increasingly important stories format,” Nowak says.
Morgan Stanley has an “overweight” rating and $185 price target for Facebook. Nomura has a $183 target for FB stock.
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Facebook, Inc. (FB) Stock Has Analysts Baffled originally appeared on usnews.com
