Facebook Inc: Why FB Stock Is Going Up
Analysts Are Bullish on Facebook Stock
Facebook Inc (NASDAQ:FB) stock has been gaining consistently, and it touched a high of $132.13 in the last trading session.
The success of FB stock has been due to the dominance of the social network in the online advertising space. However, the company continues to invest in high-growth products and services, which is likely to keep FB stock strong.
Last week, Goldman Sachs Group Inc (NYSE:GS) analysts had come up with a bullish outlook for Facebook stock, saying that their channel checks indicated strong momentum in advertiser spending for the third quarter of 2016. The firm has a “buy” rating and maintains a price target of $162.00 on Facebook stock. Their data showed that “same advertiser” spending increased 60% year-over-year in the quarter. (Source: “Facebook (FB) Stock Higher, Goldman: Q3 Ad Spending Solid,” TheStreet, October 20, 2016.)
Earlier, Credit Suisse had also raised the price target for FB stock to $170.00 and maintained an “outperform” rating. Credit Suisse is bullish on Facebook stock because it believes that the high potential of its “Instagram” app is being overlooked. Also, the firm says that the potential for Facebook’s “Messenger” and “WhatsApp” apps to be big money-spinners is not being factored in. Credit Suisse estimates that Instagram’s revenue could reach $3.2 billion this year and $6.4 billion in 2017. (Source: “How Instagram Is Going To Save Facebook,” Barrons, October 17, 2016.)
Facebook has a number of products and services under its belt that have high-growth potential. Mark Zuckerberg is betting big on the virtual reality (VR) market and had acquired Oculus two years back. Facebook is getting into online local shopping, in which users can buy movie tickets and order food from its app. This could only get better with time.
Facebook rolled out its “Workplace” chat tool earlier this month. Workplace is the enterprise tool for companies that allows workers to chat and collaborate with each other. More than 1,000 organizations around the world use Workplace (formerly known as “Facebook at Work”), and the company is seeing considerable progress and a good level of engagement. The company plans to charge a monthly fee from users, which would further expand its revenue base.
Facebook stock has returned about 36% over the past year when the broader S&P 500 posted a return of about eight percent. The company is expected to post strong numbers in its quarterly results next month. Meanwhile, Facebook’s new products and services shall keep users engaged and FB stock buoyant.
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