Mark Zuckerberg says he wants to “fix” Facebook Inc (Nasdaq: FB) in 2018. Zuckerberg’s New Year’s resolution sounds simple enough, but investors will be watching closely to see if he sticks to his pledge and how it may impact Facebook’s business.
In a new post on Facebook, Zuckerberg says he considers it a personal challenge to police Facebook’s policies and prevent users from exploiting its vulnerabilities.
“We won’t prevent all mistakes or abuse, but we currently make too many errors enforcing our policies and preventing misuse of our tools,” Zuckerberg says. Zuckerberg aims to reduce abusive and hateful content, prevent manipulation by nation states and improve overall user experience.
While Facebook users may be excited about the potential improvements to the platform, Facebook investors are a bit uneasy about Zuckerberg tinkering with a winning recipe. Facebook stock is up 56 percent in the past year, and the company has reported revenue growth of between 45 and 51 percent in each of the past four quarters.
Despite the uncertainty surrounding Zuckerberg’s resolution, Citi analyst Mark May says Facebook is among his top stock picks for 2018. May says Facebook’s relatively modest valuation, impressive ad revenue growth, tax cut tailwinds and premium video opportunity will continue to drive the stock higher.
Facebook’s 2018 may be defined by how well it executes its streaming video strategy. In September, the Wall Street Journal reported Facebook was pumping up to $1 billion into original video content in the next year, and Jefferies estimates Facebook Watch could generate up to $12 billion in revenue by 2022.
Still, May says investors should watch the impact of new privacy rules, rising costs and potential stumbles in Facebook’s video roll-out.
Facebook stock “arguably has the most attractive valuation in our universe,” he says, but adds he has “concern about how investors could react to margin pressure from heightened expense growth and from the mix shift to video advertising.”
May also says expectations for the company are sky-high following numerous upward revisions to Wall Street estimates. Facebook has…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
