Facebook Stock Shatters All-Time High of $100.00
Ahead of its earnings report, shares of Facebook, Inc. (NASDAQ:FB) are setting all-time highs, breaking through the $100.00 landmark. Facebook stock has outgunned the broader since its initial public offering, rewarding investor faith in CEO Mark Zuckerberg. Now the question is: how much higher can FB stock go?
From my vantage point, being bullish on Facebook stock is a no-brainer. When the stock first premiered on the NASDAQ, all the technology bears came out of the woodwork. They argued that investing in Facebook stock was a return to the dot-com era—a time when technology firms could raise tons of capital on nothing but hopes and dreams.
The dot-com bubble, which ended in the stock market crash of 2000, is also known as Internet 1.0. But what these critics don’t understand is how the dot-com crash forced technology firms to innovate further. Facebook stock is a product of Internet 2.0.
The fact that FB stock broke above $100.00 doesn’t mean we have another tech bubble; it means internet companies are maturing. Let’s take a look at what the market expects from Facebook stock after Wednesday’s earnings report.
FB Stock Breaks Above $100.00; Can it Hit $200.00?
The earnings report for FB stock will come out after the closing bell on Wednesday November 3rd, 2015.
Analysts are hoping Facebook stock will deliver $4.37 billion in its third quarter. Not only is that an impressive haul, but it would mark a 36.6% increase from the same quarter last year, when FB stock showed $3.2 billion in revenue. (Source: “What to watch for in Facebook’s Wednesday earnings report,” Silicon Valley Business Journal, November 2, 2015.)
Facebook stock is up 168.9% since its initial public offering in May 2012. Investors grew more bullish on the stock as Mark Zuckerberg kept up the pace of innovation and expanded the company far past its original boundaries.
After all, Facebook isn’t just a social media web site; it’s at the forefront of virtual reality technology and online publishing. Pretty much all media web sites, this one included, consider Facebook a primary distribution channel for getting content to consumers.
And FB stock could get a huge bump from the initial release of the company’s Oculus Rift VR headset. The virtual reality headset is supposed to hit stores in the first half of 2016, marking the entrance of Facebook stock into the gaming and entertainment sphere.
Analysts will bombard Zuckerberg with questions about the pricing and functionality of the Oculus, as it could be a cash cow in years to come. With the additional revenue and constant innovation, it wouldn’t surprise me if Facebook stock hit $200.00 in years to come.
Publishing Business Will Bolster FB Stock
As you scroll down your news feed and the cursor passes over a Facebook Video, the clip begins to play in silence. Just the first few seconds are enough to pique your interest and you start watching the full clip.
Facebook’s prompt is subtle enough to offer snippets of content while leaving ultimate control in the user’s hand. Treading that line requires a steady hand and long-term planning, something that didn’t characterize Facebook stock until a year or two ago.
Once again, internet companies like Facebook stock are growing up. Years ago, during Internet 1.0, Facebook stock would have risen without the company translating that addictive feature in to tangible revenue.
But things have changed. Facebook understands that it is a gatekeeper to a huge audience, and that is easily monetized by extracting a toll from content creators. The maturation of Facebook stock is a boon to investors who got in early. But fear not, there’s likely still more room for FB stock to run.