Facebook has been upgraded by bearish BTIG analyst Rich Greenfield from a sell to neutral rating this morning.
Greenfield believes Facebook revenue will “explode” in Q4 because the company is stuffing more ads in the news feed of the mobile app. Here are his updated estimates:
- Q4 ad revenues now expected to increase 42%, with total revenues up 37% to $1.55 bn.
- Q4 US ad revenue estimated up 50% accelerating from Q3 2012′s y-o-y increase of 36%.
- Q4 EBITDA adjusted EBITDA up 18% $858 mm (ex-SBC and PT).
- 2013 total revenues of over $6 bn vs. prior est of $5.6 bn and adjusted EBITDA of $3.3 bn vs. prior est of $3.0 bn.
Greenfield is not calling Facebook a “buy” because he thinks long-term Facebook is destroying the user experience.
In the video embedded below, you can see that of the 19 posts in his feed, five are sponsored stories. In other words, 20% are ads. That’s eventually going to annoy users, says Greenfield.
Facebook’s stock is up over 7 per cent this morning. Bernstein also upgraded Facebook to outperform, with a $33 price target. We are working on getting that note, and will write it up when we get it.
Here’s Greenfield’s video:
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