Facebook Stock During The COVID-19 Pandemic
As the US economy experiences a drastic downturn due to the COVID-19 outbreak, Facebook stocks are also in decline. The widespread loss in revenue and earnings have caused Facebook stocks to plunge by 15.6% whilst user activity continues to surge.
As the world experiences unprecedented changes regarding social interaction due to restrictions on face-to-face communication, social media use has been on the increase.
Facebook’s business model, however, is reliant upon advertising revenue and is struggling as advertisers cut their budgets.
However, Ivan Feinseth, Tigress’ Financial Analyst, suggests that the coronavirus pandemic is offering the social media company the opportunity to demonstrate its worth and further monetise its user base.
“The COVID-19-driven global quarantine is making Facebook the number-one place for everybody to connect for social, entertainment, business, and information needs,” Feinseth said, “Facebook’s strong balance sheet and cash flow continue to drive new growth initiatives, fund strategic acquisitions and enhance shareholder returns with ongoing share repurchases.”
In the last few months of 2019, Facebook reported its revenue growth to be at 24.7% while taking on 90 million new users monthly and experiencing a 6.7% increase in net income.
The brand is also generating more positive media attention by pledging to provide $4 million worth of grants to small companies and 10,000 new jobs to help boost the US economy and provide financial support to those affected by the pandemic.
It is also reported that new features such as a desktop Messenger app are to be released to help meet the increased demand for video conferencing for those working from home.
As Facebook’s engagement continues to increase after the global economic shutdown, its balance sheet remains healthy and its stock still possesses the lowest forward earnings multiple out of all of the FANG (Facebook (F), Amazon (AMZN), Netflix (NFLX), and Alphabet (GOOG)) stocks, at 17.3.
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