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Crash or “Buying Opportunity”; What is Next for Facebook?

October 2, 2017
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It has been an interesting past few weeks for Facebook to say the very least. The social media giant has found itself tied up in a Congressional investigation and has been forced to settle its stock reclassification outside of court. The company’s stock took a significant blow as a result of these setbacks, but investors may be wondering what the next few weeks will bring.

There is a chance that the company could find itself stagnating or even going down over the next few weeks as a result of these setbacks. According to CTV, “the company said it found 450 accounts and about $100,000 was spent on the ads.” These ads were then cross referenced with similar findings at Twitter to discover they came from Russian sources. The sheer volume of ads is what has many analysts worried. Facebook will have to make some serious changes to their ad software to ensure something like this can never happen again and they must do so quickly. Should any more bad news surface at a Congressional hearing, the company could find itself in hot water.

There is, however, a case to be made for Facebook’s recent decking being more of an opportunity than a slump. CBS recently came out with a report on why the social network would bounce back:

….there’s little indication that the major analysts on Wall Street are uneasy over the stock’s staying power. “We believe that investors should be looking at this weakness as a buying opportunity,” asserted Shebly Seyrafi, equity analyst at FBN Securities, who rates Facebook as “outperform,” with a price target of $210 a share.

Investors and analysts such as these are basing this on Facebook’s penchant for rapid adaptation as well as their potential expansion in China.

Expansion into China could unlock an entire new market for Facebook that would put it in an unprecedented position as the dominant name in internet advertising and social media. While a case could be made that they are already in such a position, any doubters would soon have no choice but accept Facebook’s dominance if they gained access to the Chinese market.

Investors should follow the news on Facebook for the next few weeks as they will give a strong indication of which way the wind will blow for the company.

To read CTV‘s article on Facebook and Twitter’s Russian advertising issues, click here.

To read CBS‘s take on why Facebook is still a solid pick going forward, click here.

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