Financial Trading Blog
Stock of the day 22/04/2016 – Facebook Inc
Like most of the market Facebook began to trickle lower as 2016 began, from an opening price of $102.10 (already down from its $104.73 2015 closing price) to $94.06 by the 21st January (having hit a 3 and a half month intraday low of $89.39 the day before).
Yet that all changed (well, for a brief moment) as January came to a close, Facebook leaping into life thanks to a stellar fourth quarter report. As Twitter was revealing a shrinking user base Facebook more than doubled its Q4 net profit, from $701 million to $1.56 billion, with full year revenue matching that muscular growth with a 44% surge to $17.9 billion. Even more importantly monthly users grew by 14% to 1.59 billion in the fourth quarter, 1.44 billion of which were using mobile devices.
(Source: IT-Finance.com 22/04/2016)
That news helped Facebook soar past $110 for the first time in its history, eventually striking a fresh all-time peak of $117.58 by the start of February. However, like many of its market peers the volatility that opened the second month of the year saw soon the stock fall from these highs, plunging all the way back below $100 within the space of a week.
Yet Facebook quickly got back on track, and by the beginning of March had risen to $110 once more. Cut to a month later and the company had crossed $115, effectively matching its post-Q4 all-time peak. The stock has stumbled since April began, however, a warning from Deutsche Bank that Facebook’s Q1 performance may disappoint, and an estimate-missing first quarter showing from Google-parent Alphabet, leading it to a current trading price of $111.35 (IT-Finance.com, 22/04/2016).
In terms of those first quarter figures, analysts are expecting Facebook to post a 48% rise in revenue to $5.26 billion (over $5 billion of which should come from advertising, itself a 52% increase), alongside a 20 cents rise in earnings per share of $0.62.
Facebook Inc has a consensus rating of ‘Buy’ with an average target price of $129.80.
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