Negative headlines about Facebook won't slow down anytime soon - but that won't stop the stock from surging 17% over the next year, analyst says

Daniel Strauss

Dec 4, 2019, 01:20 IST

Negative headlines about Facebook won't slow down anytime soon - but that won't stop the stock from surging 17% over the next year, analyst says

AP Photo/Andrew Harnik

Facebook has been the subject of countless negative headlines this year relating to its approach to political advertising, monitoring of hate speech, and antitrust concerns.
One Wall Street analyst says the company's negative news flow might not stop anytime soon, and investors have come to accept it.
Here's why Piper Jaffray's Michael Olson thinks Facebook's stock could gain 17% over the next twelve months.
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Facebook has had a rough year in the news - from headlines about the social media giant's approach to political advertising to the federal investigations into potential anti-competitive practices.

Piper Jaffray analyst Michael Olson says Facebook's negative news flow will likely continue, but Wall Street is willing to tolerate it because it's expected.

"We do not expect the flow of news related to government inquiry and investigation into the company's business practices, data privacy, election tampering, etc., will subside any time soon," Olson wrote in a note to clients on Tuesday.

He added: "We believe most investors have become comfortable with the fact that this is an ongoing issue with risk of periodic multi-billion dollar fines."

The negative news around the social media giant this year has yet to show up in its share price. Facebook's stock is up as much as 45% in 2019 compared with the S&P 500's 23% gain.

Olson initiated coverage of Facebook on Tuesday with an "overweight" rating and $230 price target. The figure represents a 17% premium from where shares traded on Tuesday.

The analyst said Facebook has "emerged well positioned" from a few difficult years, and that it appears both users and advertisers have stuck by the company's platforms amid the turbulence.

Facebook is also posed to benefit from the ongoing shift toward digital advertising, Olson said. The firm's future growth could come from commerce initiatives such as Instagram Shopping and Facebook Marketplace, he added.