Citron Research has turned positive on Facebook (FB), calling it the "2019 S&P Stock of the Year" in a report issued Wednesday. The short seller set a price target on Facebook stock 26% above where it had been trading.
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More than two years ago, Citron's Andrew Left called Facebook a long-term short. He also said engagement levels would eventually top out. But with Facebook stock down more that 41% since hitting a record high on July 25, Citron said it's now time "to back up the sleigh!"
"The Facebook platform has advanced a long way and has turned this research firm from a one-time skeptic to a major bull," Left wrote in a research note. He set a price target on Facebook stock of 160.
Facebook stock jumped 8.2% to close at 134.18 on the stock market today. It hit an all-time high of 218.62 five months ago. On Monday, Facebook stock touched its lowest level since January 2017.
Despite negative publicity related mostly to data privacy issues, Facebook continues to grow quarterly revenue at a double-digit rate. The company's Instagram app also is becoming a stronger platform for e-commerce, he said.
"Instagram is going to become a bigger platform for brands to offer product deals through stories, creating a sense of urgency and scarcity, and video-friendly formats," Left wrote.
Hammer Hitting Facebook Stock
The hammer hitting Facebook stock the hardest in the past year began with the Data Analytica privacy scandal that surfaced in February. Data privacy issues and combating fake news continue to hurt, causing some users to give up on the social network.
"Books have been written and movies have been made on the Facebook is evil topic, but never before has Facebook been this compelling of an investment opportunity," Left wrote.
"As investors have become overly concerned about the short-term noise of privacy and propaganda, they have forgotten to look at the earnings power and potential of the most advanced advertising tool with global reach in messaging, networking, and the future of shopping."
Facebook's Instagram, a photo and video-sharing app, has become a compelling platform for advertisers, Left said.
"Investors will be rewarded by the shift of user behavior to Instagram shopping and the personalization of the commerce process," he wrote.
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