FaceBook Stock Price Forecast
Facebook stock is one of the key equities on the S&P and affects the stock market forecast and the focus of much scrutiny from investors. There are plenty of reasons why the company’s stock is highly priced.
Facebook’s advertising revenue never seems to slow despite whatever media calamity is going on. The current negative press surrounding the website outage on Tuesday and the claims of a former Facebook employee who has become known as the whistleblower is just another hit on the company’s reputation. It never seems to shake investors belief in FB’s earning power. Those political and ethics minded investors who sell are missing out on substantial earnings.
This graphic below shows Facebook’s revenue, free cash flow, profit margin and operating revenue keep rising. The pandemic turned out to be a blessing as quarterly revenue ballooned further. Now as the pandemic recedes, investors aren’t sure if the company will continue putting up big revenue numbers. See more on why Facebook thrives below.
What’s exciting about Facebook and its Stock Now?
- media is attacking FB and it has drawn the price down below real value
- stock prices has been falling and could be a good buy the dip opportunity
- winter is a strong period for social media sites
- 39 of the 51 analysts rate FB as a buy while the remaining 12 have a hold rating and none had a sell rating on the stock
- Morgan Stanley and Goldman Sachs have a price target for Facebook above $450 while RBC has a target of $425
- FB, Instagram, and Whatsapp a fixture in young consumers lives and competition is weak against the FB monopoly
- economy is recovering with likely added US stimulus ensuring businesses will be advertising via FB
- global growth will return and FB’s userbase is growing there too
Facebook Stock Price Continuously Rising
Facebook has a monopoly size power and the company has much more potential than it has shown. Its gargantuan audience of daily loyal users (see below) is astounding and gives the company unequalled access to consumer markets. The marketing data it captures in this process gives it an ongoing unfair advantage.
There’s a number of things Zuckerberg and company have launched that could push its stock price much higher. But the real draw is that it’s a monopoly stock and Facebook’s stock price has kept on rising as I’d predicted.
Facebook’s lock on social media advertising means it rakes in money because advertisers have nowhere else to go. Small businesses are now completely dependent on FB. Only the anti-trust investigations can change that. The DOJ and governors have never acted before.
Covid 19 Has Been very very good for Facebook
Its social media platform has seen a huge jump in use and engagement as the Corona Virus pandemic continued. For a lot of bored, stay in place people, Facebook offers a distraction and a way to connect with friends and family. For that reason, Facebook advertising is pulling in a lot of ad revenue (See 1st quarter results below).
Will people still use Facebook after the pandemic? Is there an alternative?
Before you jump to buy Facebook stock, check out what the company is all about below and what’s new. Facebook monopoly is a blessing for its investors, but DOJ is making anti trust anti monopoly noises. However, they did this before and not much happened.
Facebook Stock Price
What’s New with Facebook?
Facebook Rooms, Facebook Workplace, and Facebook shops are three new ventures worth mentioning. Facebook Rooms is set to counter Zoom Video and its sudden success. Is Facebook jealous, or does Zoom (NASDAQ: ZM) poses some sort of threat?
Or does Facebook Rooms fit with Facebook Workplace as a way letting up to 50 people collaborate via video? Facebook Rooms will apparently use AI to create 360-degree panoramic backgrounds as well as support for augmented reality (AR) filters similar to Instagram and Snap’s Snapchat.
Facebook shops is an interesting new service to help small businesses sell online. One analyst sees a potential $40 billion market that puts it up against Shopify.
Facebook pretty well competes with anyone and everyone.
Facebook recently announced Libra, a new payment system and Facebook news, two ventures to increase sales revenue and distract more users from their posting. The Libra venture would be wildly profitable if the US government approves it.
Yet Facebook is under monopoly/antitrust investigation and it’s unlikely they will be okay about Libra which one government official was Facebook’s tool for printing money. Should you look at other tech stocks? See our top stock picks for 2020.
Facebook Earnings Report
Facebook’s 1st quarter 2020 earnings report reported a $2.5 billion growth in ad revenue to a new high o f$17.4 Billion. That was a 17% year over year growth. FB daily active users grew 11% to 1.73 billion, and monthly active users grew 10% YoY to 1.6 billion.
FB earnings per share grew 101% to $1.71 per share and net income rocketed 102% YoY. The current Facebook stock price sits at $231 per share.
Facebook Stock Price Earnings Ratio
For Facebook and Mark Zuckerberg, it seems poor judgment is more of a factor. Experts believe Facebook’s Libra payment product will never be approved. And Facebook continues to face a variety of anti-trust investigations and monopoly charges in the US and Europe. It had to write off $3 billion in legal costs to defend against US government action and pay fines.
Some politicians believe Libra is Zuckerberg’s attempt to literally print money and they see it as dangerous. Just asking for approval for Libra may begin a bigger tide of distrust against the social media giant. Still, the Facebook forecast is bright and is one of the best stock picks for 2020.
As one of the key FAANG Stocks, Facebook is a key stock on the NASDAQ. If you’re asking, as you do your retirement planning, whether you should invest in Facebook stock, the answer may be cautiously yes.
Facebook’s Profit Making Model
The future of social media is excellent and Facebook’s business model is excellent. They collect all the advertising money they make and share it with no one. Facebook dominates social media platform use by all age groups and haven’t even figured out how to maximize advertising revenue.
Increasingly, Facebook has positioned itself as the only social media channel. With Twitter and Linkedin struggling to remain relevant, Google+ disappearing, and Pinterest as a cottage pastime site, Facebook is left with a monopoly on social media. Facebook earns 93% (87% last year) of its revenue via mobile media and the might tell you why Google is emphasizing mobile now.
Facebook’s userbase continues to grow, from 300 million in the US now, forecast to reach 324 million in 2026. Add on Canadian users of near 30 million for North American totals.
Global Growth of Facebook
Worldwide, Facebook has entered the lives of 2.85 Billion people. Did McDonald’s revenue stop when they maxxed out in North America? It actually generates most of its revenue outside of the US, so FB may be following the same path.
Global Revenue per user – Chart courtesy of StatistaThis rosy report should elevate its stock price and encourage buyers to get in on some good dividends in 2019. Estimates for earnings per share are $2.21.
How Facebook Thrives – Advertising Revenue
Finding a downside in the picture is difficult. No real competitors are presenting themselves and their global userbase should grow for many years. If you use Facebook, you know how much less intrusive its advertising is. They’ve got lots more opportunity to grow ad revenue via FB, Messenger or Instagram.
Ad revenue from Instagram is expected to make a big difference in future. Consider that Facebook will have to the two top platforms for young and older users. Monopoly is the goal and they’ve got it.
Facebook bought Whatsapp for $19 billion but it hasn’t earned much money so far. Worse, a number of rival SMS technologies put the success of whatsapp in question. Forbes believes in it, and says its ad revenue will be $5 billion per year by 2020. Userbase is only at 23 million so there’s plenty of potential if it can penetrate the North American business market.
Together with Google, Facebook almost owns Internet advertising. It would be hard for any startup to get established against them.
Facebook’s advantage comes from the user identity and behavioral data they collect. The company has used that data to feed into artificial intelligence systems to predict customer behavior and thus show more relevant advertising to stimulate buying intent. This is an enormous advantage over smaller firms who know little about users online behavior.
A recent estimate by 44 stock analysts predicts a median estimate of a 27.5% increase in Facebook stock value. The range they projected was from a high of 275 down to a low of 149. So the experts are divided about Facebook’s future value. Long forecast has set a Facebook price of $151 in 2021.
Where is Facebook’s Future Revenues? Instagram
Instagram is Facebook’s cash cow, expected to earn $14.4 billion in world-wide sales, which amounts to 4.4% of the global ad market and 6.2% of the global mobile market. There’s lots of room to grow.
Should You Buy Facebook Stock?
There are plenty of high flying stocks that could offer better stock price appreciation, stronger P/E ratios, and higher dividends, yet Facebook is one of those solid stocks you should have in your portfolio. It has almost Blue Chip status.
Check out the state of the stock market and the best stock picks, and be familiar with the DOW forecast, S&P forecast and NASDAQ forecast. Review the predictions for all of the FAANG stocks. The predictions of some experts and media people are for bond price increases, right now with Fed Chair Powell pushing interest rates up. The equity markets still have a long way to go. Don’t believe the pessimists.
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