Facebook Shares Cut From Wedbush Best-Ideas List on Ad-Slump Concern
Facebook (FB) - Get Report on Thursday was removed from Wedbush's Best Ideas List after analysts raised concerns about the social-media giant losing ad revenue in light of the economic shutdown caused by the coronavirus pandemic.
The analysts said in a note to clients that they "have seen anecdotal evidence that advertising spending is dropping precipitously."
Twitter (TWTR) - Get Report cautioned that its advertising revenue had declined year-over-year, they said, and several media outlets have cut staffing levels due to dropping ad revenue over the past few weeks.
Last month, Twitter withdrew its first-quarter guidance amid uncertainty over how the coronavirus pandemic will affect operations.
"Many economists are projecting a decline in GDP of 20% or more for the June quarter, which suggests a similar decline in advertising spending," the Wedbush note said.
"We still think that Facebook is a relative winner, and expect Facebook to weather the storm of an advertising decline."
The Wedbush analysts maintained their outperform rating and $250 price target for Facebook, but they said they "think that much of the near-term upside for Facebook is already priced into its stock."
At last check Facebook shares slipped 0.6% to $175.93.
Facebook was added to the Best Ideas List last month, when Wedbush analysts noted "the seemingly unprecedented and unrelenting volume of news related to the global pandemic," and how a large percentage of the world's population used Facebook as its primary source of information.
The list is made up of Wedbush’s highest-rated companies in the consumer, financial, health-care and technology-media-telecom sectors.
They are chosen by analysts, then vetted by Wedbush’s investment committee.
Wedbush employs an automatic sale rule should a stock move -25%, on a relative basis, versus the average move of the S&P 500 and the Russell 2000.
