Facebook Inc (NASDAQ:FB) strong uptrend continues to take the Street by surprise as some investors continue to speculate that the stock could soar to a high $100 a share this year. During an interview on CNBC, Cowen & Co-Head of Sales Trading, David Seaburg, reiterated that the underappreciated Instagram and a steady growth in user numbers could be key, to the stock reaching the $100 mark.
A survey carried out by one of Cowen & Co.’s analysts valued Instagram at $33 billion according to Seaburg, creating a buzz of a unit that has remained under the shadow of Facebook Inc (NASDAQ:FB)’s core business. The research firm now has an ‘outperform’ rating on the stock with a share price target of $91.
“[…] He valued Instagram at $33 billion, it’s a massive driver for them and I think it was really underappreciated. […] I think the stock was $75 when he came out with the call, $80.82 here today. The survey cited user growth accelerating dramatically, and they are seeing a massive uptake,” said Mr. Seaburg.
The growth in ad spend by marketers is another frontier that Seaburg believes will be key to Facebook in the months to come as the company continues to benefit from a steady growth in its user base. Facebook Inc (NASDAQ:FB) is one of the key players in the ad market that is experiencing a shift from TV to digital, which the analyst believes will provide important revenue stream.
“There is a $200 billion worldwide ad market for TV that is going to shift over to digital. These trends are going to be very positive for Facebook Inc (NASDAQ:FB), which is a company. One of the few companies that is going to benefit from that significantly. Two of the fastest growing business Instagram and Facebook they are going to benefit from that shift from TV to digital.
From a trading perspective, Twitter Inc (NYSE:TWTR) may seem a better option compared to Facebook Inc (NASDAQ:FB) having rallied by 24% to the former 4% over the past one month, suggestions that Seaburg downplays. The analyst maintains Twitter is a short, arguing the company does not have the ability to grow its user base with the same thrust as Facebook. Seaburg also argues that Twitter is highly complicated and not user-friendly.
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