Facebook: BofA still a buyer after name change
(CercleFinance.com) - On Friday Bank of America renewed its buy recommendation on Facebook, as well as its target price of 400 dollars (closing price on Friday about 324 dollars, +2%), after the technology group decided to rename itself "Meta" after 17 years under its original name.
In its comments, the US bank explained that the internet giant's decision was due to the growing share of applications such as Instagram and WhatsApp within its business, and by the increasingly negative perception surrounding the Facebook brand.
As for the group's ambitions in the "Metavers", its virtual universe project, BofA believes that the planned annual investment of 10 billion dollars in the field speaks for itself.
The firm believes that virtual reality could generate interesting markets, estimated at several billion dollars, for example for obtaining virtual tickets for the Superbowl, taking cooking lessons with a celebrity chef or trying on sunglasses online.
While BofA recognises the "transformative" potential of the project, the bank also points to the risk of capital destruction associated with it, with investments likely to amount to over 50 billion dollars before they pay off.
In its note, Bank of America also mentions the risk of losing sight of its main businesses (Facebook, Instagram), as well as the possible competition from Apple in the sector, all of which the bank believes are at the root of the lukewarm reception given to the project on Wall Street for the moment.
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