After consolidating their gains for 2020 in the first quarter, Facebook shares (NASDAQ:FB) went on to start a new rally.
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MarketBeat originally published this story
After consolidating their gains for 2020 in the first quarter, shares have risenFacebook (NASDAQ: Facebook)The new rally, which is still in full swing, was launched by the social media giant. Its stock has risen by 40% in the $1 trillion social media company since March and is only weeks from reaching $400.
New Facebook investors might feel a bit unsure about a stock worth $1 trillion that is soaring at highs, while the overall tech market struggles to maintain its outperformance of last year. We don’t need much to learn about the inside of Facebook. Last quarter’s revenues were more than $26 million, an astounding 47% increase over the quarter of 2020. This turnover is comparable to the GDP of many well-developed nations.
Even with the well-deserved rally in shares, it’s not clear that the stock has started to get a bit frothy. Facebook’s PE ratio of price to earnings (PE) is at 30. This is far below the triple-digit print that Silicon Valley peers enjoy.Tesla (NASDAQ: TSLA).For example, Facebook has an almost 650 price-to earnings ratio after it had taken a 30% discount to its stock. Facebook has had a PE ratio below 35 for many years, suggesting that the stock is maturing and should be more appealing to investors with long-term plans as well as big money funds.
The company’s PE range has grown to be more appealing and the COVID epidemic has been a success. The ad unit of Facebook was well-positioned to take advantage of the surge in ecommerce activity caused by the pandemic. These gains will be very long-lasting and sticky. When it comes to innovation and expansion, Zuckerberg and his team are not slowing down. Their past success includes snapping up Instagram and WhatsApp, while Oculus (a virtual reality company acquired in 2014) is poised to generate $1 billion annually in revenue.
Comparable To Peers
Facebook ranks second in comparison to the FAANG peers, only behind Twitter.Google (NASDAQ: GoogleOOGL)Stock performance for the last twelve months. This quarter, the most notable winner. We’ve already seen that there is enough momentum to allow them to stay at the top of the stock market for the remainder of the year.
However, bear camp members might disagree with the above and point to lingering privacy and antitrust policy concerns. These regulatory risks are so well-known that you would expect them to be included in the share price. The possible dissipation these risks may provide short-term upside as well as a longer-term tailwind for the stock. Wall Street will be required to think about the worst-case scenario and begin to consider the possibility of the stock falling.
We’re talking about a company that has its product used daily by more than 2 billion people. Facebook is undoubtedly the largest company in terms of market reach and depth, as evidenced by its most recent earnings report.
The shares of the company have reached new all-time highs over recent weeks and don’t seem to be at risk. Stock’s relative strength index stands at 60. This suggests that shares have a lot of potential to run from now. The earnings report next week is expected to beat analyst expectations. If it does, then we may soon see Facebook shares trading in the $300s.
Facebook is part of Entrepreneur Index. This index tracks the most publicly traded and profitable companies that were founded by entrepreneurs.
Publited Fri, 23 July 2021 at 12:13:53 (+0000).