The shares of Facebook Inc (NASDAQ:FB) witnessed a massive downward rally and the company lost up to 7% share value closing at $75.30 in the pre-market trading after its quarterly results. The primary reason behind the decline is the heightened spending plans of the social networking giant; however, the company has received thumbs up from all the major analysts.
After reporting more than 50% growth in its quarterly revenue, Facebook Inc would not have expected such market response. Its plan for aggressive spending didn’t get around well with the shareholders. However, the analysts are opined that the massive spending would help the company achieve long-term growth and ensure its market dominance in the upcoming years.
Analysts from JP Morgan Securities said,
“FB delivered another strong quarter and is very well-positioned in an increasingly mobile and social internet landscape, and to be clear, FB is investing into strength and future growth opportunities.”
Most of the analysts have updated their target price for Facebook Inc (NASDAQ:FB) including JP Morgan ($85 against prior $90), Piper Jaffray ($82 against prior $90), Credit Suisse ($88 against prior $90), and UBS Capital ($92 against prior $95).
At the same time, analysts such as Goldman Sachs have called the temporary weakness as an excellent point for new investors to purchase the stock. Analysts at Goldman Sachs are opined that “the current weakness in Facebook shares is excellent buying opportunity.”
Further, the temporary drop in share prices is considered to be a routine reaction of the market this season as most of the tech companies including Google Inc (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN) have experienced the momentarily decline.
Earlier, Facebook Inc (NASDAQ:FB) announced 55 to 75% increase in its annual spending primarily on its latest acquisitions including WhatsApp, Oculus, and Instagram.
This article has been written by Prakash Pandey.
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