Facebook Stock Forecast 2020

Facebook Stock Forecast 2020

FaceBook Stock Price Forecast

Why is Facebook’s stock price soaring the past 4 weeks to its all time price? It’s up $80 or more than 100% in that time. There’s a number of things Zuckerberg and company have launched that could push its stock price much higher.

Zacks gives it a hold rating, but it’s highly recommended by brokers. You may want to see the price earnings chart below.

Facebook’s dominance in mobile advertising up against Google, (see Google stock price too) active users, and engagement levels come from its place in consumers lives. Many feel Facebook is vital to their everyday lives. They log in and post frequently.

 

Covid 19 Has Been very very good for Facebook

It’s social media platform has seen a huge jump in use 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).

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.

The government is investigating Google right now (see Google stock price) but it won’t be long before Facebook in their crosshairs again.

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. Screenshot courtesy of Yahoo Finance.

Facebook Stock Price Earnings Ratio

Screenshot courtesy of Zacks.

Dark clouds are forming for all the FAANG tech stocks including Google, AppleNetflix and Amazon.

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.

Social Media Platform User Base – Screen capture courtesy of tradingeconomics


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, now at 242 million in North America.

Young or old Facebook owns social media – Screen capture courtesy of Tradingeconomics

Global Growth of Facebook

Worldwide, Facebook has entered the lives of 2 Billion people. Will its revenue stop growing? Did McDonald’s revenue stop when they maxxed out in North America?

Facebook Global Users – Screen Cap courtesy of Statista

Facebook ad revenue forecast – screen capture courtesy of Statista.com

Global Revenue per user – Chart courtesy of Statista

This 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.

Facebook Earnings History 12/30/2017 3/30/2018 6/29/2018 9/29/2018
EPS Est. 1.95 1.35 1.72 1.47
EPS Actual 1.44 1.69 1.74 1.76
Difference -0.51 0.34 0.02 0.29
Surprise % -26.20% 25.20% 1.20% 19.70%

The stock is down 24% since last July due to bad news and a slipping economy.

Facebook Stock Price Forecasts

CNBC’s cast of 45 analysts weigh in on where Facebook’s stock might go in the next 12 months.

Expert stock forecasts – Screen capture courtesy of CNBC

Faang Stock Price Chart

Only Netflix and Amazon complete with Facebook’s price surge of late?  Is this category in a bubble or ready to explode?

FAANG Stock price growth – Screen capture courtesy of Yahoo Finance

Here’s what Jim Cramer thought last spring when everyone was down on Facebook:

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.

Whatsapp – Screen Capture courtesy of whatsapp.com

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.


Pic: whatsappusers-us

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.

Facebook Stock Performance – Screen Capture courtesy of Yahoo Finance

Facebook’s stock value has risen of late. We’re seemingly through the worst of the mini-recession and the US economy is ready to take off once again. Since Facebook gets most of its revenue in the US, a rising economy bodes well for Facebook ad revenue, just as it has the last 5 years.

Facebook’s stock performance correlates positively with the US economy.

Facebook is one of many corporations expected to buy back a lot of their stock in 2019. Goldman Sachs believes there will be $1 Trillion in buy backs this year. The company has designated $9 billion to buy back shares. Share buy backs are generally considered a positive sign for future earnings.

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.

The US economy in 2020 will soar and that will fuel a rosy 2020 housing market forecast.  Good luck with your stock portfolio this year.

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22 years of experience as a content researcher, strategist and SEO expert for marketing agencies and his own company. Gord's investigation into housing markets, stock markets, and AI marketing strategy helps clients achieve market dominance. Some of Gord's blog posts have achieved half a million pageviews with over 7,000 social media shares, revealing Gord Collins special talents for building reach and impact. Visit the AI Marketing website for an introduction to the AI marketing era. Artificial Intelligence is lending extra benefit to the power of marketing software which is enhancing SEO, Copywriting and Sales. Gord offers a new brand of SEO services and to regain his reputation as a leading SEO expert. See his 2nd book which describes the powerful relationship between SEO and Content Strategy. Gord's passion is researching algorithms, trends, forecasts, and market statistics to establish clients at the top.

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