Facebook (FB): Missing Key Component - Mizuho
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Mizuho Securities analyst, Neil Doshi, reiterated his Buy rating on Facebook (NASDAQ: FB) noting that it's been nine years since the company attempted a marketplace feature in 2007 that didn't take off. However, the company now has 450m users visiting "buy and sell" groups each month that it can leverage for its enhanced peer-to-peer marketplace making adoption more likely.
Facebook's marketplace leverages a wealth of detailed user profiles which should provide a better sense of security among sellers and buyers in the community versus anonymous exchange services such as Craigslist. However, the new service does not (yet) include a review feature that typically encourages participants to be more accountable with their transaction activities. The analyst thinks that a seller review system is critical for the success of a marketplace.
Regarding competitive share shift, the analyst stated "We see Facebook Marketplace taking share from Craigslist, but we also believe many people will want to remain anonymous and not open their social network to strangers. Furthermore, the feature does not handle integrated payment services and therefore will likely have a marginal impact on eBay's marketplace business. We do not believe this will have any impact on Amazon's 3P business".
No change to the price target of $150.
Shares of Facebook closed at $128.77 yesterday.
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