Facebook – Could we hear good news at last?

FB, Daily

Facebook will report its fourth quarter earnings after the close of the US session later today. Never short of a headline or two, a poll of analysts by Reuters which complies also with a poll by Zacks Investment Research, suggest the social media behemoth will report earnings per share of $2.17, slightly lower from the reported EPS a year ago. Revenue is expected to be released at $16.4 billion, 26% up from a year ago, the slowest for any quarter since Facebook went public in 2012. 40 out of the 52 analysts in a Reuters poll have a Buy or Strong Buy recommendation for the stock with a median target of around $190.00 and mean target at $184.01. Facebook closed up yesterday at $143.65. 

2018 was a year packed with repeated privacy scandals, which pushed the stock down close to 32% from record highs at $218.49 and over 22% year to date. This led to questions about the long-term viability for a business model that’s reliant on user engagement. Therefore the market is likely to focus on the number of active users.

Figure 1 and 2: [Thomson Reuters. (2018)] Reprinted from Facebook Inc. Financial Highlights, retrieved from https://www.reuters.com/markets/stocks .

Technically, in the medium term, Facebook remains in a downtrend channel. However, the recent reversal of more than 23.6% of the losses seen since July 2017 turns the near term outlook to positive one. The 20-week Moving Average, which coincides with 23.6% Fib. level, was breached in mid January at $145.37. On the daily chart the asset remains above it so far today, with Support at 50-day SMA, at $139.30.

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Andria Pichidi

Market Analyst

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