Facebook Inc (NASDAQ: FB)
Facebook Stock Earnings Review
On Wednesday after the close, Facebook stock ($FB) got a nice boost following the release of their fourth quarter earnings along with 2016 year end results. The company announced adjusted earnings per share of $1.41 on $8.81 billion in revenue while analysts were looking for $1.31 earnings per share on $8.5 billion.
“Our mission to connect the world is more important now than ever,” said Mark Zuckerberg, Facebook founder and CEO. “Our business did well in 2016, but we have a lot of work ahead to help bring people together.”
Facebook also announced a strong rise in advertising revenue as it soared 53% year-over-year and their monthly active users (MAU) jumped 17% to 1.86 billion. Both of these items are key metrics for analysts and both topped expectations. $FB has received numerous upgrades following their earnings which could help fuel a rally.
Looking over the daily chart above you will see that shares have had a nice bounce after hitting triple bottom at $114 in early January and have rallied over 14%. Shares are well above their 200-day moving average currently at $ 122.03 and the 50-day moving average at $122.47.
What’s really interesting is that the 50-day moving average just crossed over the 200-day, which is a bullish pattern called a golden cross. This generally means that buyers are in control as long the 50-day stays above. All moving averages are starting to point north as well, which is another signal buyers have taken control and could mean we see higher prices in the future.
Facebook stock had a rough morning following their earnings. Shares got a nice pop and then sold off hard through yesterdays highs and all the down to yesterdays lows as of the time of this writing. This was unexpected following their positive earnings and definitely caught a lot of traders off guard.
Ideally we would want to see shares hold on to the $130 level but if it breaks through there then we could see it slide down to the 20-day moving average currently sitting at $128.18. Further down from there we have $124 and $122 as key pivot levels on the daily chart. Resistance levels are at the high today at $135.50 and premarket highs at $138.
Looking at the 5-minute chart above you will have a better look at the price action from this morning. Prices were extremely volatile with high spreads and whippy price action and over a 3 point range in the first thirty minutes of trading. Shares should remain volatile over the coming days so if you are trading Facebook make sure to manage your risk appropriately.
As of right now, prices look lower as a huge reversal hammer is forming on the daily chart along with a bearish engulfing candle if prices close below yesterdays lows.
Despite today’s price action, Facebook is still a strong company with plenty of resources to continue growing. What I am really looking forward to is the company they purchased back in 2014 called Oculus VR. I believe that virtual reality will be a huge part of the future and if Facebook plays their cards right they could be at the forefront of this market.
However, with that said, growth will eventually begin to slow and we will have to look at how they handle that issue going forward.
Chief Financial Officer David Wehner addressed again that they expect ad revenue growth to slow, stating: “Consistent with my comments on the Q3 call, we continue to expect that our ad revenue growth rate will come down meaningfully in 2017.”
This is something investors will have to keep a close eye going forward but I still remain optimistic in their ability to engage users and grow the company.