Shares of Facebook fell Tuesday after two analysts downgraded the stock amid concerns about the company’s ability to grow ad revenue quickly enough, especially on mobile devices.
THE SPARK: Bernstein Research analyst Carlos Kirjner said that while Facebook’s advertising business still presents “significant untapped” opportunities, mobile ad revenue in the most recent quarter didn’t grow as fast as he’d expected. He cut his rating on the world’s largest online social network to “Market-Perform” from “Outperform” and lowered his target price to $27 from $33.
BTIG analyst Richard Greenfield, meanwhile, downgraded the stock to “Sell” from “Neutral.” He has a target price of $22.
ANALYST COMMENT: “Facebook management continues to focus investors on the increased ‘engagement’ with Facebook, as consumers shift from desktop usage to mobile usage,” Greenfield wrote in a note to investors.
That means people end up “touching” Facebook far more as they move to mobile use, since the Facebook app sends many of them notifications when their friends respond to their posts or for other reasons.
“Yet, the question Facebook has yet to answer is how mobile is affecting aggregate engagement, meaning total time spent on a monthly basis,” Greenfield added. “We suspect the more consumers shift to mobile, the less total time they are spending with Facebook.”
A representative for Facebook could not immediately be reached for comment.
STOCK MOVEMENT: Facebook shares fell 89 cents, or 3.2 percent, to close at $27.37. The stock has lost close to 12 percent so far this month after enjoying an upswing since last October. Facebook went public at $38 last May and has not hit that price since.