Facebook Inc (FB) Still Receives ‘Likes’ Despite Recent DowntrendBy Carrie Williams
Share prices of social media giant Facebook Inc (NASDAQ: FB) tumbled by nearly 8.7% this past week, thanks to the political uncertainty of the US elections, the looming Federal hike, as well as an commentary from CFO Dave Wehner that ad revenue growth of FB would slow ‘meaningfully’ when announcing the 3Q16 results of FB.
Facebook had posted yet another successful quarter on Wednesday with strong revenue growth as well as significant increase in its number of active users. FB reported a 56% QoQ growth with a revenue of $7.01 billion vs the estimated $6.92 billion. The EPS stood at $1.09 vs the estimated $0.97. Facebook also crossed one billion ‘mobile only’ users, a historic first for the company, and its Mobile advertising revenue accounted for 84% of advertising revenue.
Recent comments following its Q3 results were positive on the Street, one of them was Credit Suisse analyst Stephen Ju, who maintained their Outperform rating as well as the $170 target price on Facebook. The price target is an upside of nearly 41% from the last close of $120.75. The 340.51 billion market cap holder is currently trading below its 50-day SMA after recently hitting a new 52-week high of $133.50. Even though bears seem to be having an upper hand lately, the 200-day SMA of $118.03 is expected to be a good support area for Facebook.
Facebook’s latest gamble of transitioning itself into a video-driven platform seems to be paying off. Facebook’s key focus on putting video ahead of status updates is said to be the first step in its 10-year roadmap. Facebook is also openly taking on the challenge from its rival Snapchat after a failed acquisition bid for it in 2013. FB is now in the testing phase of its app redesign that has Snapchat-like feature of disappearing pictures post 24-hours. Clones of Snapchat is also being tested in Messenger and WhatsApp, with plans for wider release in future.
The company recently became the victim of internet shut down in Turkey. Instagram and WhatsApp were also affected following the country’s state of emergency. Meanwhile, there are rumors floating about regarding the acquisition of fledgling startup due to the $26.14 billion cash balance retained by FB.
Currently, based on analyst recent ratings on FB the consensus rating on the company is a Strong Buy, according to TipRanks.com. The average analysts’ price target is at $159.19 which is an upside of 31.83% from its Friday close $120.75.