Facebook Inc shares are, like the rest of the market ahead of open on Monday morning, getting crushed. Oppenheimer, a Wall Street research house, reckons that makes now a great time for those with hope for the future of the firm to buy in. At time of writing shares in the social network were selling for $80.21 on the pre-market. That’s 6.8 percent less than their closing price on Friday.
Oppenheimer says that Facebook is on its list of web stocks that are well worth buying during the current correction. Netflix Inc. and TubeMogul also make the list, but it’s clear that traders on Wall Street aren’t listening to that advice on Monday morning. Shares in Netflix are down by more than 10 percent at time of writing, while TubeMogul is also set to open lower.
Buying Facebook in market chaos
It’s not clear where the market is heading on Monday. Anybody who says they know is unlikely to be right. Oppenheimer isn’t saying that Facebook Inc is going to beat the market this week, however. The research house is saying that Facebook is a good bet in the long term because of its core business prospects. Oppenheimer is saying the same thing about Netflix .
With shares across the market falling sharply on Monday, and Apple falling below $100 for the first time since last year, traders may be too scared, or in trouble with margin calls, to take advantage of Oppenheimer’s advice.
Wall Street has not yet weighed in on individual stocks in the wake of the massive drop across the market. The median price target on Netflix sits at $121 right now, while the median target on Facebook is at $110.
Jason Helfstein, who wrote the report for Oppenheimer, said that though there are risks in Facebook, the firm is still a great buy on the pullback of last week. The firm’s outlook hasn’t changed, and the risk/reward made it an appealing buy right now.
Facebook, Netflix still risky bets
There is a reason that the market is selling off high growth stocks like Facebook and Netflix on Monday. It’s not assured that either stock will be able to grow in the years ahead and global risks are causing the market as a whole to compress in multiple.
Jim Cramer said to watch Disney last week for clues about where the market is going. A Bernstein report on the firm said that though earnings forecasts were unchanged, the outlook on the market multiple for the firm was lower as a result of changes in the media market.
Mr. Helfstein said that risks for Facebook included slow ad pick up for new platforms like Instagram as well as currency headwinds. Facebook gets 51 percent of its sales from outside of the US, and a strong dollar could cause issues going forward says Helfstein.
Changes in the way Wall Street is viewing the stock market as a whole will compress on Monday after the market opens.
Betting on any single stock, as so many have found out in the last few days of trading, carries a high risk. Oppenheimer thinks that Netflix and Facebook are the best bets in the pullback, but they’re still risky as a slow down in China shakes the market from the ground up.