Facebook Inc. (NASDAQ:FB) seemed to be coming back from its low point in the stock price, and seemed to get a bounce from positive comments from CEO Mark Zuckerberg last month at the TechCrunch Disrupt conference. But apparently, one analyst at least is looking through the fog and optimism and is not sold on the stock’s apparent comeback.
BTIG analyst Richard Greenfield sent a note Monday morning expressing some serious revenue concerns for Facebook Inc. (NASDAQ:FB), which explained his decision to downgrade the stock from Neutral to Sell and setting a new price target of $16 per share. The stock closed Friday at just shy of $21 per share. Greenfield dropped his revenue projections from $5 billion to $4.9 billion in 2012; and from $5.9 billion to $5.6 billion in 2013.
In a blog post, Greenfield said of Facebook Inc. (NASDAQ:FB) that he was “increasingly concerned with Facebook’s mobile monetization approach” and saw “growing tension between the Facebook user experience and monetization, particularly as the collapse of payment revenues has left Facebook with only one major lever to pull – advertising.”
Greenfield added, “In the face of drastically slowing payments revenues and falling investor sentiment and employee morale, it feels like Facebook is pushing advertising monetization harder than they should be, which we believe will harm user engagement in 2013 and beyond.” The big issue for Facebook Inc. (NASDAQ:FB) has been its ability to monetize mobile through advertising, as about 60 percent of Facebook inc. (FB) users are accessing the Web site through mobile devices like smartphones and tablets. And while Greenfield noted that mobile advertising seems to have better returns than desktop advertising, “the outperformance is driven by how much of the screen they occupy (more annoying) and ‘fat-fingers’ (accidental clicks).”
Greenfield went on to add that he believes that Facebook Inc. (NASDAQ:FB) Q3 2012 ad revenue will beat consensus, which would be an expression of “an aggressive ramp in monetization efforts, particularly on mobile devices.” However, this move “is negatively impacting the user experience on mobile devices by adding to an increasingly cluttered (less-useful) news feed.”
Chances are, though, that investors in Facebook Inc. (NASDAQ:FB) stock, like billionaire fund manager George Soros of Soros Fund Management,will likely appreciate the efforts to monetize mobile, but they will also keep an eye on the work Facebook Inc. (FB) does to have a long-term mobile viability.