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S&P Capital IQ Equity Analyst Scott Kessler on why he considers Facebook a “buy” for investors.
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FaceBook shares down about 45% since the company's initial public offering in May -- 271.
Million more shares become eligible for trading tomorrow but this next analyst says FaceBook is up by.
S&P capital IQ equity analyst -- He's sort of that was the contrary and Colin you're not alone George Soros you've got John -- Stevie Cohen over it SAC.
All exhibited positions in FaceBook recently but you tell us what you see right now that says buy this company.
Good company I guess right was.
So.
Look we have been I would say.
Negative to neutral on FaceBook.
Really even since before came public you know put up the pre IPO we search where we talked about risks and a stretched valuation.
We initiate coverage on May 23 -- sell opinion.
And really since June 5.
We've had a hold opinion on the stock.
All the while it seems like the shares have dropped and dropped and dropped.
Here's our thesis essentially.
We think that FaceBook from a fundamental perspective is actually doing pretty well we're looking for at least point 5% growth in annual revenues for the next three years.
In addition to that we think companies more more focus on monetization of mobile.
Two big questions and it seems like everyone is focused on -- concerned about this lock up expiration taking place tomorrow but we really don't see.
A lot of folks.
Selling shares.
As a result of their ability to do so in part because some of them have long term relationships of FaceBook and in part because the stock is just so depressed at this point.
Well -- -- quite a lot of -- what -- they called the brain drain Scott lot of executives leaving FaceBook which I guess is not that unusual in that -- but it's.
You mentioned the monitor there -- getting some monetary return on mobile applications I mean.
Are you convinced that they really have what it takes -- they have the strategy in the plan to actually turn what is a huge phenomenon.
Into actual money.
Yes actually.
I wouldn't say -- -- events to be totally honest with you but -- think that.
The way the stock has traded.
You know the risk it is a lot lower than it was and we now see a lot more upside so I completely agree that.
There's still is a pretty substantial open question as to whether or not.
There -- gonna ultimately be able to build a sustainable business.
Based on mobile.
But we think that the stock already reflects those risks and that's one of the reasons why we like the shares right now.
Will you have some legitimacy here because you were bearish before so now you see things that you like Scott so I think that that's an important point to make but.
How old.
Anxious are you about tomorrow you've got the the lock up period expiring a lot of people are maybe gonna take the shares of they have and that they had before the IPO let's say -- -- -- -- Right now Liz I mean absolutely it's a good point and this is one of those situations where.
No one really knows what's gonna happen.
I think it's fair to say that you're gonna see some of the folks that sold.
On during the IPO selling additional shares but who knows how much or when I'm in addition we think a lot of and individuals.
Have been selling and perhaps will sell and not just individuals -- institutions as well.
Because they expect.
This.
Significant a masters -- become available and be sold so.
I get the impression that there's a lot of confusion and potential miss information.
About this lock up expiration and we think that presents a buying opportunity wanna do big question do they think -- these shares or do they wanna sell I'm Scott Kessler S&P equity analyst Scott.
Thanks so much effect -- I --
