Gene Munster, a top analyst at Piper Jaffray, is mostly known on Wall Street for his coverage on Apple. He believes the tech giant is currently developing an Apple television set and that it will be the biggest thing in consumer electronics since the smartphone first came out. Munster also predicts the iPhone 5, which is set for release this fall, will serve as a large catalyst for the company and help Apple reach his price target of $910 a share. However, Munster’s latest call on one of the biggest debacles in Wall Street’s history has raised eyebrows across trading floors.
On Thursday, Munster released a research note and appeared on CNBC to describe that investors should “want” Facebook shares for their long-term potential and soon-to-be released monetization features. He explains, “There’s evidence of this want button. Obviously there’s the like button now, but the basic concept is this will allow Facebook to get a better handle on what people are actually wanting to buy. This is more nebulous to what Google (NASDAQ:GOOG) is doing with search. This is a whole level of monetization that no-one is talking about that ultimately we think Facebook will be involved in. They’re going to get mobile right, but I think this want button will at least lay the groundwork for investors to have some form of confidence that Facebook is not just doing this for the social good.”
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Shares of Facebook have been hovering around $19, as investors still appear to be gun shy following the company’s first post initial public offering lockup expiration. In August, 271.1 million new shares became available for trading and sent Facebook’s stock price to all-time lows. Another 243 million shares are set to be released from lockup between mid-October and mid-November, but Munster sees little downside from this. Looking at data from 30 IPOs over the past two years, he predicts only a 7 percent decline due to lockup expirations between now and November 15th. “If you have a perspective of owning a real company for the next one to two years, as a real investor, I think it doesn’t matter if you buy it now or in two months. History tells us it will trade down, but ultimately we think this is a great time to buy Facebook.”
Although Munster has a price target of $41 on Facebook, shares of the social media giant dropped more than 4 percent on Friday to make new all-time lows near $18. Other Internet names such as Zynga (NASDAQ:ZNGA) and LinkedIn (NYSE:LNKD) also traded lower. Bank of America (NYSE:BAC) announced a price target reduction on Facebook to $23 from $35, citing future lockup concerns. Meanwhile, BMO Capital cut its price target to $15 from $25, while reiterating its Underperform rating on shares.
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