Facebook (NASDAQ:FB) stock rose by 5.84% to $165.95 on Monday. So far, the stock has fallen 19% year-to-date. Facebook has been under pressure as the COVID-19 crisis disrupts global economic and operating environments. However, the company looks like it will survive this short-term storm.
If you’re looking to trade Facebook shares this week, here are a few things you might want to keep in mind.
Lower target price for Facebook stock
On Monday, JPMorgan Chase and JMP Securities lowered the target price for Facebook stock. JPMorgan Chase reduced Facebook’s target price to $215 from $225 but maintained its “overweight” rating. The firm thinks that the COVID-19 crisis will hit advertising budgets. Facebook derives most of its revenue from ad sales. As a result, the company is vulnerable to weakness in the advertising market. Last week, Facebook revealed that the coronavirus pandemic weakened the demand for its advertising service. Twitter (NYSE:TWTR) also faces weakness in its advertising business due to the outbreak.
JMP Securities cut its target price for Facebook stock to $215 from $250. The firm also cited weakness in advertising demand due to the COVID-19 pandemic. As the coronavirus keeps spreading and disrupting business operations around the world, companies slash their marketing budgets. They continue to grapple with unexpected costs.
Notably, JPMorgan Chase and JMP Securities gave Facebook stock a new target price of $215. The new target price implies that the stock still has about a 30% upside potential from its current level.
Facebook doubles down on AR/VR
Facebook has signed an exclusive deal with Plessey to supply it with components that it could use to make AR (augmented reality) and VR (virtual reality) products. Plessey makes displays that can be used in AR devices. Facebook is working on an AR glass product. The company makes VR headsets and related content through its Oculus division.
Facebook’s deal with Plessey for AR/VR components follows its acquisition of AR/VR content developers Beat Games and Sanzaru to expand its Oculus unit. In the AR products market alone, Facebook is pursuing a $73 billion revenue opportunity.
The advertising market’s health weighs heavily on how investors and analysts view Facebook stock. Most of Facebook’s revenue comes from ad sales. Facebook plans to invest in AR/VR products to diversify its revenue sources.
At the closing on Monday, Facebook stock was trading at a 40% discount to its 52-week high of $224.