Gene Munster likes Facebook stock ahead of $1T valuation milestone

on Jun 28, 2021
  • Facebook was up 21% last year against 43% for the NASDAQ.
  • House committee recommends breaking up big techs.
  • Facebook has done little reinventing itself as it did in the early years.

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Facebook Inc. (NASDAQ: FB) stock gained just 21% in 2020 which under normal circumstances would be a decent gain. But put up against the 43% return in the broader Nasdaq index, and Facebook stock has some catching up to do. Can it make up for lost time in 2021? According to Loup Ventures managing partner and founder Gene Munster, the answer is yes.

A forced breakup could be a ‘positive’ for Facebook

Facebook and other tech giants appear to face headwinds from the regulatory environment with calls from prominent US lawmakers to break up the company. But we continue to move towards “clarity” around regulatory concerns, although it could still be two years away, Munster said on CNBC’s “Squawk Box.”

Clarity is “ultimately going to be a positive”, even if Facebook is forced to break up into separate companies. Facebook stock trades around 3% shy of the $1 trillion valuation mark but as it stands today, the sum of each individual unit under the Facebook umbrella totals more than $1 trillion. He said:

I see that as a potential positive.

After all, Facebook created one of the most innovative business ideas in recent memory, and have been bolstering the core social media business through acquisitions. Facebook has also been ahead of the innovation curve with significant developments in the past ten years.

What’s next for Facebook?

Munster said that Facebook is “toxic” at the “highest levels” but at the same time it has a true global reach few companies can rival. He said:

“The reality is that two-thirds of the Globe’s internet population visits one of their properties once a month, advertisers crave that reach.”

This isn’t the first time Munster referred to social media platforms as “toxic.” In a January 2021 blog post, Munster and David Stokman wrote that Facebook’s properties remain “addictive” and the number of people who visit Facebook once a month continues to grow. He wrote:

The power of the platform is undeniable. That said, about every decade we believe companies need to reinvent themselves to address large new markets and satisfy investors for the long term. In the future, we believe AR and VR will transform how we communicate, and see Facebook’s Reality Labs as the company’s most potent and underappreciated innovation opportunity.