Facebook earnings are likely to change the game for them.
Facebook Inc. is one of those stocks that have always been in the limelight engaging investors. At this point of time, traders are anticipating bigger moves for the company since Facebook earnings will soon be unleashed.
This is not an unheard phenomenon where Facebook stocks have got an overwhelming response after earnings have been revealed. Therefore, many analysts believe that history is all set to repeat itself since Wednesday trading day will change the game for the company all over again.
Facebook stock price is expected to increase to its fullest potential once the company reveals its earnings.
According to the renowned analyst, Mike Khouw: the option prices for the firm pose a 7 per cent move once the earnings are reported. However, Khouw believes that earnings are essentially a game changer for any firm and the response after revelations is what actually interests him.
He further states, after earnings have been revealed it almost takes a months’ time to govern what direction will it move and the number usually sums to 15 per cent.
Facebook stock performance has been brilliant in general. An increase of 40 per cent was observed over the past twelve months. Moreover the Nasdaq composite has been 22 and S&P 500 has been estimated to 13 per cent. This has actually elasticized the valuation of the company.
According to a report by FactSet, the company trades almost at 38 times more than the usual expected earnings. However, many are not ready to believe or accept that Facebook stocks are generally overpriced.
"What is interesting about the valuation here is that we haven't seen multiple expansion in Facebook like we have in almost every other part of the market," said Khouw. Thus the revenues of the company have superseded growth in stock prove over the past couple of months. Hence the company’s stock is certainly not cheap.
The head of technical analysis at the renowned Cornerstone Macro believes that the company’s performance chart seem to be promising in the days to come.
Worth added that the company was not doing fairly well in the market when considering their Friday performance. But at this stage, it is expected that the company’s earnings will be good and the stocks will correspond to the upside.
"We think it bounces off the top and actually goes on to make a new high," Worth said.
Hence in a nutshell, it not all depends on FB’s earning that will cope up for all the mishaps as expected. The company’s position is strong where analysts are in favor of growth.
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