After a shaky first few months as a public company, Facebook Inc(NASDAQ:FB) stock started a steady march higher that has continued without interruption for nearly four years.
This week, FB stock once again hit new all-time highs above $120. With its second-quarter earnings due out on July 27, investors have high hopes for another blowout quarter.
Ironically, those high hopes may spell the end of Facebook stock’s meteoric multi-year rise.
FB Expectations Are Sky-High
This week, BTIG analyst Richard Greenfield downgraded Facebook stock from “buy” to “neutral,” and he cited unrealistically high expectations as the main reason.
According to Greenfield, Facebook is still one of the only ways to play the secular shift of ad revenue to the mobile environment. He also notes that BTIG is projecting a staggering 40% year-over-year Ebitda growth from Facebook in 2016. So what’s the problem?
“Investor expectations over the past year have risen dramatically and we now feel the bar is simply too high,” Greenfield concluded.
A Lesson From Netflix
Netflix, Inc. (NASDAQ:NFLX) shareholders know…
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