Facebook Shares Cut From Wedbush Best-Ideas List on Ad-Slump Concern

Facebook shares were cut from Wedbush's best-ideas list on concern that advertising revenue will slump due to the coronavirus pandemic.
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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.

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