Facebook will kill it this quarter as Zuckerberg aims to show Wall Street who's boss, strategist says

Key Points
  • Facebook stock is cheap and the embattled social media giant is about to beat first quarter earnings expectations, said veteran strategist David Seaburg.
  • Engagement is still going strong and ad buyers are still locked in, Seaburg told Power Lunch.
  • This is despite Facebook shares dropping more than 11 percent over the past month amid its recent data scandal.
Markets will start to trade in a positive way with earnings, says trader
Markets will start to trade in a positive way with earnings, says trader

It's a good time to buy Facebook stocks because it's cheap and the embattled social media giant is about to beat expectations when it reports first quarter earnings on April 25, veteran strategist David Seaburg told CNBC on Thursday.

"It's inexpensive for the earnings growth trajectory they have. We did a study today that showed engagement hasn't pulled back," Cowen's head of equity sales trading told Power Lunch. "The engagement factor is staying still. Ad buyers are locked in. I think the earnings are going to be good. I think it's a catalyst for the stock to go higher."

Seaburg added that strong earnings will be especially important to Facebook CEO Mark Zuckerberg, who spent Tuesday and Wednesday testifying on the company's recent data scandal on Capitol Hill.

"Zuckerberg — he's an arrogant guy. Let's just call it what it is," Seaburg said. "In my opinion, I think he wants to show the street something. I think he wants to put up a quarter that's incredibly incredibly polished and I think it's going to happen."

Facebook co-founder and CEO Mark Zuckerberg smiles at the conclusion of his testimony before the House Energy and Commerce Committee in the Rayburn House Office Building on Capitol Hill April 11, 2018, in Washington, DC.
Getty Images

Facebook shares, which closed at $163.87 on Thursday, have dropped more than 11 percent over the past month on news that a political research firm, Cambridge Analytica, was able to access the personal data of millions of Facebook users for political marketing. Facebook is still up more than 17 percent over the past year, however.

Zuckerberg has been under intense scrutiny, testifying to Congressional lawmakers about Facebook's privacy practices. He was grilled about Facebook's fundamental business model, the way it uses data and what kind of regulation may be appropriate.

Seaburg acknowledged that his studies show Facebook engagement has trended downward quarter-over-quarter since the beginning of 2017.

"You have to look at it more year-over-year," he said. "Take the cyclicality out of the equation. I will say to you the surveys we've done from an ad buyer perspective and the clients we're talking to — they're really waiting for this quarter's earnings to come out."