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Is There More Upside Potential to Facebook’s Stock Price?


May. 21 2020, Published 10:26 a.m. ET

Facebook (NASDAQ:FB) stock soared to a record high during trading on Wednesday. The stock joined Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) whose shares have hit a new all-time high in recent weeks. There has been a strong recovery from the pandemic sell-off in the first quarter of 2020.

The pandemic has boosted the demand for Amazon’s e-commerce service. More households have been shopping online to observe social distancing. Recently, Netflix reported record subscriber growth. The pandemic has driven video streaming.

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Upside potential in Facebook stock

At $230 per share, Facebook stock has registered a remarkable comeback from its pandemic lows of $137 reached in March. Facebook shares have risen 35% over the past month and spot a 12% gain year-to-date. However, Facebook hasn’t run its course. At this point, the stock spots a 3.0% upside to Wall Street’s average target price of $237. Moreover, the stock spots a 24% upside to Wall Street’s highest target price at $285.

Renewed investor interest

Facebook stock’s big jump on Wednesday came after the company launched a new e-commerce feature called “Facebook Shops.” The Shops feature is aimed at small businesses. There are 160 million small businesses across Facebook platforms. With the Shops feature, merchants can set up a digital storefront on Facebook and have it accessible through Instagram as well.

The new e-commerce feature is free for merchants to use. Facebook CEO Mark Zuckerberg said that the company would monetize it through advertising. According to Deutsche Bank, the Shops feature could drive as much as $30 billion in new revenue opportunity for Facebook. The bank has a “buy” rating on the stock.

Morgan Stanley sees the Shops feature opening up a multibillion-dollar revenue opportunity for Facebook. Morgan Stanley also has a “buy” rating on Facebook shares.

Facebook’s payments business

Although Facebook initially wants to monetize Shops through advertising, the feature could also earn transactional revenue if merchants integrate its payments service. Facebook has been working on a digital payment service called “Libra,” which could launch as soon as November. Libra promises to simplify everyday money transactions for consumers and small businesses. Facebook stock has gained 22% since it unveiled the Libra blueprint in June last year.

Moreover, Facebook has also been building a payment feature into its WhatsApp platform. The WhatsApp payment service is already on trial in India. Facebook’s recent partnership with Indian wireless giant Jio will likely accelerate the rollout of the WhatsApp payment service.


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