Facebook: Competitors Stance On Political Ads Should Boost Sales And Guidance

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About: Facebook, Inc. (FB)
by: James Bonifer
This article is exclusive for subscribers.
James Bonifer
Research analyst, tech, internet, IPOs
Summary

Twitter, Spotify, and Microsoft are essentially handing over ad money to Facebook by rejecting political content.

These revenues will come very cheap given they likely will just be reallocated to participating companies, and this should enhance margins.

Current guidance issued by the company which has been used by myself and the Street does not factor in these additional sales, as this news came after FB's Q3 earnings release.

This could cause the company to raise sales and net income expectations which should boost stock prices in a meaningful way.

I state my current price target based on my conservative estimates, but if my thesis proves correct, this estimate will need to be revised higher.

Overview

In the final week of December, Spotify (SPOT) became the latest internet media company to ban political ads from its platform going into the 2020 election cycle. Spotify is far from alone