Munster: There's Something 'Fundamentally Wrong' With Facebook

Loup Ventures managing partner Gene Munster joined Benzinga's PreMarket Prep trading show Thursday. While Munster remains bullish on a number of popular tech stocks that have been battered in recent months, his optimism didn’t extend to Facebook, Inc. FB.

Changing The World

Facebook isn’t going anywhere and will remain a dominant force in the tech world over the next few decades, but its glory days may be in the past, Munster said.

“There may be pockets where you’ll have a couple of quarters that may surprise people, but on the margin I think they’re going to be less frequent."

Facebook isn’t trying to change the world in a meaningful way, a factor Munster said may weigh on the stock’s earnings multiple in the long term.

Facebook is facing growing costs associated with monitoring and policing its content and use, Munster said.

Lastly, people tend not to feel good about themselves when they spend too much time on Facebook and Instagram, he said.

“There’s something fundamentally wrong with a product that makes people feel jealous after they use it," he said.

See Also: Loup Ventures: Facebook, Twitter Should Let Users Filter Political Content From News Feeds

A Safer Bet

Facebook’s major advertising competitor Google GOOGGOOGL has pulled back significantly from recent highs, and Munster said traders can expect more volatility in the near-term.

“They still have some questions to answer around how data is being used," he said. "In the next six months, that could weigh on Google’s multiple."

However, in the longer-term Munster said Google is a safe bet.

"They are changing the world,” he said. “If you have a view of longer than a year, this is still a great story to own.“

Facebook shares traded down 3 percent Friday to $139.62.

Listen to Gene's full interview in the clip below.