Bank of America predicts that Alphabet will experience better stock recovery than its FAANG peer Facebook in 2021.
The Bank of America on Wednesday said that Alphabet Inc, the parent company of Google, stock (NASDAQ: GOOGL) will have a bigger stock recovery than online advertising counterpart Facebook Inc (NASDAQ: FB) as the world gets back on its feet following a COVID-19 vaccine roll-out the first half of 2021.
This was in an overview of prospects for cyber-giants like Alphabet Inc’s Google, Facebook, Twitter Inc (NYSE: TWTR), Snap Inc (NYSE: SNAP) and Pinterest Inc (NYSE: PINS) in 2021. Elements like the Covid vaccine, regulatory changes and Apple’s IDFA privacy change are expected to affect the companies’ stock performance.
Analysts are confident that the roll-out of the Coronavirus vaccine in 2021 will positively affect the performance of some companies that have had a tough time in Q3 2020.
Google Is a Better Vaccine Recovery Stock than FB in 2021
Bank of America predicts that Alphabet will experience better stock recovery than its FAANG peer Facebook in 2021. They assert that the move “back to services from goods, to private from public, and to in-person from virtual” will result in search promotion and translate into increased revenue.
The report states:
“Google has a more diversified advertiser base than some of its social peers and saw a bigger deceleration in ad growth in 2Q […] We think exposure to travel (roughly 10%), and other local activity (including retailers and local businesses) could make up over 30% of search advertising revenues, and these sectors could come back in 2021”
The Bank believes that if Facebook could focus on ‘under-monetized’ aspects like shopping initiatives, it’s stock will be even stronger in the second half of next year.
Will Regulatory and Privacy Changes to Affect Stock in Early 2021?
Google and Facebook continue to undergo public scrutiny and cases of data privacy and protection violation. Experts are confident, however, that even with these hurdles, the ‘fundamentals of their businesses’ will be more consequential in 2021.
Apple’s new set of privacy rules, give users the option to block apps from tracking their activity for ad purposes. This is expected to affect advertising revenue in 2021. Facebook and Snap (the company behind Snapchat, Bitmoji and Spectacle) will be the most affected with Twitter, Pinterest and Google being on the safer end.
Recovery Hope for Twitter, Snap and TikTok Stock 2021
With Brand Advertising set to make a comeback next year, companies like Twitter, Snap and TikTok can expect revenue to pick up. Of the three, experts believe Twitter is best poised to reap the benefits.
TikTok, which has been known largely for its entertaining content could begin to venture into more professional content. This could result in more attractive pricing for its ever-growing ad business.
The Bank of America analysts also commented on the boycotts of Facebook advertising earlier this year. They concluded that the boycott did not seem to have any lasting effects on Facebook’s Q2 and Q3 growth.
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