Another Analyst Drops Facebook Target Price

By David Cohen 

Damned if you do, damned if you don’t: Facebook’s “aggressive” monetization efforts were the main reason cited by BTIG Analyst Richard Greenfield for lowering his firm’s target stock price on the social network to $16 per share.

Facebook went public May 18 at $38 per share but quickly plummeted, opening at $20.40 Monday morning and closing at the same price.

According to CNET, Greenfield wrote that he expects Facebook’s ad revenues to rise in the third quarter due to its monetization efforts, but in the long run, he sees users being driven away, particularly by mobile ads, adding:

Unfortunately, we believe this ramp in advertising is negatively impacting the user experience on mobile devices by adding to an increasingly cluttered — less-useful — news feed. In the face of drastically slowing payments revenues and falling investor sentiment and employee morale, it feels like Facebook is pushing advertising monetization harder than it should be, which we believe will harm user engagement in 2013 and beyond.

Facebook advertising appears relatively generic, talking to a wide swath of consumers — similar to television — with very little targeting and with a very low bar in terms of the level of creativity Facebook requires from its advertisers. To make matters worse, we increasingly see brands violating Facebook’s social mission by deceptively trying to acquire likes, so they can target you and all your friends going forward.

Readers: Do you agree with Greenfield?

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