Facebook (FB) and Gucci have sued the head of an international counterfeiting business. In the lawsuit, the two companies allege that the individual has been using several Facebook and Instagram accounts to sell imitation Gucci products. This first of its kind lawsuit for the two companies underscores Facebook's fight against the proliferation of counterfeit products on its social networking apps. The company's terms strictly prohibit infringement of IP and the sale or promotion of phony products. It has also put in place IP protection measures as part of its global program for taking down content. Facebook insists that collaborations with brands such as Gucci are essential if it is to succeed in tackling counterfeits in its apps. Their partnership is built on a joint commitment to combat the sale of counterfeit goods online. (See Facebook stock analysis on TipRanks) The social networking giant has also affirmed its commitment to ensuring its platforms are safe for people and businesses to connect and do business. Likewise, it plans to continue working with Gucci in enforcing efforts against counterfeits. Baird Equity Research’s analyst Colin Sebastian remains bullish on Facebook's prospects after solid 1Q 2021 financial results. According to the analyst, the results were positive, with upside to revenues and profit margins. The analyst has also quashed concerns about Facebook's Q2 outlook reiterating that the company is well-positioned to leverage first-party data and predictive analytics. "Despite impressive revenue growth and margins, Facebook's monetization rates on its ads are still very low outside of the US. Over the next two years, we forecast Facebook revenues to increase significantly, reaching ~$130B by 2022, representing a compounded annual growth rate (CAGR) of approximately 30%” Sebastian wrote in a research note to investors. The analyst has reiterated a Buy rating on the stock with a $340 price target implying 10.71% upside potential to current levels. Consensus on Wall Street is that FB is a Strong Buy based on 21 Buy and 3 Hold ratings. The average analyst price target of $364.48 implies 18.7% upside potential to current levels. Facebook scores a 7 out of 10 on the TipRanks' Smart Score rating system, implying that its performance is likely to align with market averages. Related News: Ford Builds Global Battery Center In Michigan ADT Files Lawsuit Against Amazon’s Ring Service – Report IBM Partners With HCL To Create A Unified Threat Management System
Shares of Facebook (FB) jumped 6.2% in Wednesday’s extended trading session after the social networking service company posted 1Q results that surpassed analysts’ expectations by a wide margin. Outstanding advertising revenue growth, aided by a 30% rise in the average price per ad, a 12% increase in the number of ads delivered, and margin expansion were the primary drivers for the results.
The company reported strong 1Q revenues of $26.2 billion, topping consensus estimates of $23.7 billion. The 48% year-over-year increase was fueled by a 46% rise in advertising revenue. Furthermore, Facebook’s average daily active users (DAUs) increased 8% year-over-year to come in at 1.88 billion.
Facebook reported earnings of $3.30 per share, up 93% on a year-over-year basis, and outpaced Street estimates of $2.37 per share. Operating margin expanded to 43% from 33% in the same quarter last year. (See Facebook stock analysis on TipRanks)
Facebook’s CFO Dave Wehner commented, “We expect second quarter 2021 year-over-year total revenue growth to remain stable or modestly accelerate relative to the growth rate in the first quarter of 2021 as we lap slower growth related to the pandemic during the second quarter of 2020. In the third and fourth quarters of 2021, we expect year-over-year total revenue growth rates to significantly decelerate sequentially as we lap periods of increasingly strong growth. We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recently-launched iOS 14.5 update, which we expect to begin having an impact in the second quarter.”
Facebook expects total expenses to be in the $70-$73 billion range in 2021, compared to prior forecasts of $68-$73 billion. Capex is estimated between $19-$21 billion, down from the previous estimation of $21-$23 billion, and driven by investments in data centers, servers, network infrastructure, and office facilities.
Oppenheimer analyst Jason Helfstein increased his price target on the stock to $375 (22.1% upside potential) from $350 and reiterated a Buy rating “as 1Q results showed impressive q/q revenue acceleration on two-year basis, removing COVID-19 comp impact.”
“Given the fragmentation of media and communication,” Helfstein believes “consumers will increasingly find media and information through their social graph, positioning FB in the middle of this information exchange.”
Consensus among analysts is a Strong Buy based on 16 Buys versus 1 Hold. The average analyst price target stands at $355.27 and implies upside potential of 15.7% to current levels. Shares have gained more than 58% over the past year.
Furthermore, TipRanks data shows that financial blogger opinions are 92% Bullish on Facebook, compared to a sector average of 66%.
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