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Facebook Is Losing Share in Mobile: Analyst

Mark Zuckerberg
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Mark Zuckerberg

CEO Mark Zuckerberg gave his first interview since Facebook went public on Tuesday and responded to criticism about the missteps in its mobile strategy and the sharp drop in the stock price. While investors appeared to like what they heard, one analyst has slashed his price target on the stock.

Ken Sena, an analyst at Evercore Partners, reduced its price target on Facebook shares to $23 from $34. Sena has an “equal weight” rating on the stock.

“He was excited in the project road map, he showed candor about the missteps they made around mobile and I think he showed a willingness to accept where maybe they needed to sort of reassess and redeploy and that they could do it quickly,” Sena said of the interview. “I think in that respect, the interview went very well.”

Sena said he isn’t underestimating Zuckerberg or Facebook, but took down the price target to be prudent.

“When you look at some of the traffic trends, particularly what came out earlier this week from ComScore, they are showing they’re losing quite a bit of its audience, particularly among the 12-to-24 age range,” he said.

Sena was referring to August numbers from ComScore, a firm that tracks digital metrics, which showed a 42 percent decline in traffic among 12-to-17-year-olds and a 25 percent decline among 18-to-24-year-olds.

“While this audience, you would expect to be moving to mobile, Facebook’s not necessarily gaining share on mobile,” the analyst noted. “Instead, they’re growing with peers such as Google and Apple. Their share loss on desktop is disproportionate.”

He added that it would be different if desktop was holding steady while mobile was increasing at the same rate as its competitors. “But I think when you’re talking about combining the two, desktop and mobile, Facebook looks to be a share loser on that business,” Sena said.

Google grew 11 percent in time spent on desktop in August and roughly at the same rate as Facebook on mobile, Sena noted, adding, “I think you could draw the conclusion that Google is doing quite well compared to Facebook currently.”

That makes it harder for Sena to justify a premium valuation for the shares.

Sena also said his lowered price target already gives Facebook a good deal of credit for the opportunity in mobile.

“Longer-term, we’re expecting the top line to grow at a 20 percent compound annual growth rate,” he said, “three-quarters of that growth is currently betting on mobile succeeding.”

—By CNBC.com’s Justin Menza

Additional News: Facebook Will Make More Money on Mobile Than Desktop

Additional Views: Did Zuckerberg Just Turn Around Facebook Shares? ______________________________

CNBC Data Pages:

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Disclosures:

Evercore or an affiliate expects to receive or intends to seek compensation for investment banking services within the next three months.

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