The value opportunity in Facebook
Facebook is now a value stock as its business is going to slow in the future, according to Antipodes.
The firm’s chief investment officer, Jacob Mitchell, said in a webinar that Facebook – which was now known as Meta and a 3.4% weighting in the Antipodes Global fund – would be hindered by a downturn in advertising.
He said: “We think it’s a value stock. In advertising, exposures like Facebook whose business is correlated to e-commerce, they are certainly going to slow.
“The simple expectation is all investors should expect these online advertising and these online commerce [businesses] to dramatically slow and we think Facebook is priced for that slowdown.”
Shares in Facebook had fallen 3.7% in the past month although it was up 24% since the start of the year, according to data from Google Finance.
Looking at other technology stocks, Mitchell highlighted Amazon as a potential winner as it would be able to gain market share.
“Amazon has the potential to take back some market share that it lost during the once-in-a-lifetime expansion in e-commerce as a result of COVID lockdowns,” Mitchell said.
“We would be very cautious about the smaller e-commerce exposures, those that are more narrow or more sector-specific or where we think there will be greater competition in a tougher environment. There are headwinds emerging and investors will need to be selective.”
It was a similar case for software as a service (SaaS), where companies like Microsoft, Oracle and SAP were best navigating that environment.
“Zoom is a great example of how tough it can be when you are only doing one thing compared to Microsoft and what that can do for you,” Mitchell said.
“There will be more competition and a slowing adoption cycle but within a longer structural shift.”
Microsoft and Amazon were also both in the fund’s top 10 weightings at 3.6% and 2.5% respectively.
AUTHOR
Laura Dew
Recommended for you
Perpetual has released its Q2 fund flows showing a fall back into outflows after a positive Q1, as well as an update on its planned deal with KKR.
Magellan has announced a raft of executive changes including the departure of head of investments Gerald Stack after 18 years and a second appointment from Maple-Brown Abbott.
Morningstar research of seven active Australian asset managers has found they are expected to see client redemptions averaging 3.1 per cent of their FUM per annum through to FY29, with two forecast to lose more than 10 per cent.
Franklin Templeton is to get rid of its Martin Currie branding and fold them into the wider group under ClearBridge Investments and Franklin Equity Group.
