Social media giant Facebook (FB) is buying the new, and currently unused, headquarters of Recreational Equipment Inc. – REI – near Seattle, for $367.6M, reports the Wall Street Journal.
According to the report, REI had hoped to move in to the 400,000-square-foot space this summer but due to the COVID-19 pandemic the company decided to switch tack and let its employees work remotely instead. It had been constructing the site for two years.
As the Wall Street Journal writes, this deal is the latest signal that large tech companies are driving the commercial real estate industry right now.
Even though FB is considering letting its employees permanently work from home, “In order to address our rapidly growing workforce, we continue to make investments in physical office locations,” said Facebook.
“In the second quarter of 2020, we added a record 4,200 net new employees and now have more than 52,000 employees. While Facebook envisions 50% of its employees will be working remotely within the next 5-10 years, our offices are still vitally important to our culture and will help accommodate anticipated growth and meet the needs of our employees that need or prefer to work from campus.”
“An internal employee survey the company fielded in May showed that approximately 65% of Facebook employees were eager to return to the office as soon as possible,” Facebook added.
Shares in FB have soared 30% year-to-date, and the stock scores a bullish Strong Buy consensus from the Street. That’s with an average analyst price target of $294 indicating 11% further upside potential lies ahead.
RBC Capital analyst Mark Mahaney has just reiterated his FB buy rating with a $320 price target. “Our analysis of three interesting product initiatives (Marketplace, Shops and Reels) leads us to believe that the market may be underappreciating the level of product development at FB” he explains.
He estimates that Facebook Marketplace has over 1B MAUs (monthly active users), making it larger than Alibaba, ~2x eBay & ~12x Craigslist. According to the analyst, Marketplace can generate up to $2.8B in 2024 Revenue by applying a “Light Marketplace” Take Rate (5%) on $54B of GMV (gross merchandise value). (See FB stock analysis on TipRanks)
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