Facebook and Google: from “Buy” to “Neutral”
Sometimes – very rarely – Wall Street bites the hand that feeds it, and no hand has fueled Wall Street more than the FAAMG companies (Facebook, Amazon, Apple, Microsoft, Google-Alphabet) that have spent tens of billions on brokerage fees and advice on the Internet.
That's why we found it very surprising that Goldman and Morgan Stanley reiterated their positive views on FAAMG at that time, with Goldman's David Kostin writing over the weekend that “many investors expressed the view that economic deceleration should support. the outperformance of the largest “Big Tech” stocks on the market.
But not everyone agrees ..
In a Citigroup note, bank internet analyst Jason Bazinet downgraded Apple and Facebook to Neutral from Buy as "caution is needed" for companies that make digital advertising revenue and "The Sixth Turning is coming." This reference is based on an empirically noted cycle in the online advertising industry: over the past 15 years, Internet ads have enjoyed three periods of accelerated growth: from '10 to '12, from '15 to '18, and today. But they also showed three periods of growth deceleration: from '08 to '10, from '13 to '15 and from '18 to '20. Even if the bullish forecast on the selling side is correct, the next wave of deceleration – the sixth turning point – will begin in Q3 21 or Q2 22 (when two-year stacked growth rates peak).
Based on these cyclical data, the City analyst moved two shares from Buy to Neutral – Facebook and Google – Alphabet.
this is because these two stocks are not linked to alternative real markets, or less so than the other players. With the advertising removed, little remains of their model, so they are more fragile in times of slowdown in the sector. In the end, not all high techs are the same.
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The article Facebook and Google: from “Buy” to “Neutral” comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/144377-2/ on Mon, 10 May 2021 15:24:39 +0000.