The technology is also failing, as seen in the first week of October when Facebook, Instagram, and WhatsApp went down for six hours. The Zuckerberg emporium was quick to deny that anyone had maliciously tampered with its systems; rather, it was a maintenance error that disconnected Facebook’s data centers from the Internet.
The share price of the social network sank almost 5% on October 4, until it fell to the area of $ 326. Yesterday, its titles were even trading below that figure, at $ 324 . The recent falls have again lowered the price that is paid on the stock by Facebook before the expected profit. In October, the PER (times that the profit is included in the share price) for a twelve-month view of Facebook has once again fallen below the average multiplier at which the S&P 500 is traded , something that has happened at some other time of the year .
With earnings expected in 2023, Facebook trades at lower multipliers than the S&P 500. Analysts calculate a PER of 17 times for the social network, compared to 18 times for the index. Likewise, Facebook’s profit multipliers for 2022 and 2023 are lower than those presented by the other large technology firms in the US stock market, such as Alphabet (PER 2023 of 22 times); Apple (23 times) and Amazon (36 times).
Not only the blackout of Facebook and its applications a few days ago had to do with the declines in the park. That same week, Frances Haugen , a former employee of the American company, revealed internal information from the technology company in which she warned about the damage that Instagram can cause to teenage users .
Haugen testified before the United States Congress, where he accused Facebook of “prioritizing benefits to the people”, and will do so again on October 25 before the British Parliament. Furthermore, if he were to accept the invitation, he could also appear before the European Parliament on 8 November.
Just a month ago, Facebook shares reached an all-time high in the price after hitting $ 382.18 at the end of the session on September 7. However, the titles of the North American firm have since lost around 15%. Even so, so far this year they have revalued just over 18% and from the annual low they recorded in January ($ 245.6), the stock has risen 32%.
In this context, Facebook has a potential market tour of 29% , according to the market consensus collected by Bloomberg, which means that its shares could approach $ 418 in the next twelve months. For some analysts, the share would be worth $ 450, as is the case with investment firms Evercore ISI, Raymond James and JP Morgan.
The key is that the market expects Facebook to keep breaking records in its numbers. Looking ahead to 2021, analysts forecast an increase in net profit of 39%, exceeding 40,000 million dollars for the first time (about 34,100 million euros at the exchange rate) and will reach the level never seen of 50,000 million dollars (next to 46.7 billion euros) by 2023.
At the moment, at the end of the second quarter of the year, Facebook achieved net profits of 19.9 billion euros, which should double the net result for the first half of 2021 to achieve the objective expected by analysts. The most important thing for the company is that it continues to increase its profit margin. 2020 closed with a gross margin of 46% compared to 43% in the first half of 2021.
Analysts believe it will rise to 55% at the end of the year. They are the highest among their peers . The consensus foresees that Twitter will be at 28.7% this year and reach 30% in 2022; and Alphabet will be around 40%.
The expected growth of net profit for Facebook in the triennium reaches 34% , it is slightly below those known as FAANG (acronym to name Facebook, Aplhabet, Amazon, Netflix and Apple ), whose profits will rise, on average, 40 % until 2023, although there are big differences. Amazon continues to lead, indisputably the distribution sector. Its profit is expected to exceed $ 48.7 billion in three fiscal years.
Facebook will present its next results on October 25 . A profit of about 9.1 billion dollars is expected for the summer quarter. If confirmed, it represents an increase of 16% compared to the same period last year.
“We believe that Facebook’s virtual ownership of the social graph, its strong competitive moat, and its focus on user experience position it to become a durable, long-term, first-rate company built,” they highlight from JP’s analytics team. Morgan . From the US bank they focus on the value that the company has for advertisers: “Facebook is in an unusual situation with regard to the combination of scale, growth and profitability, since the massive reach and participation of the company continues to drive network effects, and its targeting capabilities provide significant value to advertisers. “
Lose 13% of its value in a month
Facebook already resigned at the end of September to a capitalization of more than a billion euros – it reached 1,078 billion at the beginning of the month – which means that it has left more than 165,000 million euros of valuation on the way. It is trading at May levels after the last ‘blackout’ a week ago, after falling 13% since last September 13. In front of the sector, it supposes to fall 9 points more.