Facebook stock sinks, but analysts take a years-long outlook

Associated Press

NEW YORK

Investors are dumping Facebook’s stock, spooked by slowing revenue growth, the lack of a financial outlook and plans to spend more money in the coming months.

Are they right?

Only if they are thinking in the short term. Investors can expect Facebook’s stock to be volatile for a few years. But analysts say those willing to wait likely will be rewarded — someday.

“I view it as a tomorrow stock,” says Christian Bertelsen, chief investment officer at wealth- management firm Global Financial Private Capital.

“The whole thing on Facebook is, look, if your time horizon is hourly, weekly or even monthly, this is not the stock for you,” he adds. “You need to take a much longer-term view on it.”

That’s about three or four years, he says.

Founded in CEO Mark Zuckerberg’s Harvard dorm room in 2004, Facebook was a product of the PC era. Now, in the age of mobile computing, a growing number of people are accessing Facebook through their iPhones, Android gadgets and tablet computers. Yet Facebook is only now starting to figure out how to make money from its mobile audience.

“The company is going through an almost painful transition from desktop to mobile,” Baird analyst Colin Sebastian says.

He calls Facebook “a speculative investment” but one with plenty of potential.

“With almost 1 billion users, Facebook is amassing the most comprehensive user profile database in existence,” Sebastian says. This, he adds, offers a “significant opportunity” to reap a big chunk of the global advertising market, which currently is at $500 billion a year.